Mortgage rates rise for second consecutive week

Mortgage rates rose a bit for the second week in a row while home prices remain high, and many buyers are still waiting for costs to come down before making a move.

Still, an increase in demand has some economists shining cautious optimism on the housing market.

Freddie Mac’s latest Primary Mortgage Market Survey released Thursday showed that the average rate for the benchmark 30-year fixed mortgage nudged up to 6.66% this week, an increase from 6.62% last week. The popular note averaged 6.33% a year ago.

At the same time, the rate on the 15-year fixed mortgage edged lower for a second straight reading, averaging 5.87% after coming in last week at 5.89%. One year ago, the rate on the 15-year fixed note averaged 5.52%.

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“Mortgage rates have not moved materially over the last three weeks and remain in the mid-six percent range, which has marginally increased homebuyer demand,” said Sam Khater, Freddie Mac’s chief economist. 

Homes under construction in Sacramento, California, on Monday, July 3, 2023. Buyers are increasingly looking toward new homes as the inventory of existing homes for sale remains low. (David Paul Morris/Bloomberg via Getty Images / Getty Images)

“Even this slight uptick in demand, combined with inventory that remains tight, continues to cause prices to rise faster than incomes, meaning affordability remains a major headwind for buyers,” Khater said. “Potential homebuyers should look closely at existing state and local resources, such as down payment assistance programs, which can considerably help defray closing costs.”

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The Mortgage Bankers Association’s (MBA’s) index of mortgage applications released Wednesday rose 9.9% for the week ended Jan. 5, compared with one week earlier.

An “Open House” sign outside a home in Washington, D.C., on Sunday, Nov. 19, 2023. The National Association of Realtors is scheduled to release existing homes sales figures on November 21. (Nathan Howard/Bloomberg via Getty Images / Getty Images)

“2024 started strong, with gains in both refinance and home purchase applications leading to a 10 percent jump in overall activity for the week,” said MBA President and CEO Bob Broeksmit. 

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He added, “With rates expected to remain below 7 percent for the foreseeable future, MBA anticipates renewed activity in the housing market heading into the spring, especially if housing supply continues to rise.”