The current mortgage interest rates forecast is for rates to remain relatively high throughout December. Mortgage rates spiked over the summer to their highest level since 2001, and have remained above 7% for 10weeks straight. Our market expert sees no signs that either rates or the housing market will make a big turnaround before the year ends. We’ll likely have to wait for the end of 2024 to see rates closer to 6% than 7%.
Progress on inflation points to the possibility of a “soft landing,” however, as we come down from the dangerous heights of inflation we saw in the summer of 2022. If inflation does eventually fall without the labor market or broader economy taking a jarring hit, rates are likely to decline and help the housing market pick up steam.
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Mortgage rates fell steadily throughout November, landing at 7.22% during the final week of the month, according to the Nov. 30, 2023, Freddie Mac Primary Mortgage Market Survey®.
With several Federal Reserve members dropping recent hints that inflation may finally be coming under control, investors looked ahead to a potential end to the Fed’s cycle of rate hikes. The two-year Treasury yield saw a notable drop during the final week of November, as a surge in demand from enthusiastic investors drove up consumer prices.
Although market watchers do finally foresee an end to the latest rate-hike cycle, the Fed isn’t expected to start cutting rates until the second half of 2024. And if new data comes in that results in more Fed rate hikes in the near future, it will likely push mortgage rates ever higher.
Even when the Fed does start to cut rates, we shouldn’t expect a dramatic reduction, said Jacob Channel, LendingTree’s senior economist. Instead, we’ll probably see some gradual 25-basis-point cuts here and there. If that happens, rates could fall to closer to 6% next year.
However, Channel expects rates to remain high compared to the levels seen during the height of the pandemic, when average 30-year mortgage rates were around 2.65%. Those record lows, as nice as they were, might not ever be seen again in our lifetimes, Channel said.
Will home affordability improve in December?
Winter home shoppers aren’t likely to see significantly better affordability in December. High mortgage rates and low supply are making it extremely hard for the majority of would-be homebuyers to afford houses in today’s housing market, Channel said. Until rates and home prices start to drop, we’ll likely see mortgage demand remain low, he added.
Compared to this time last year, home sales remain quite low due to those high rates and an ongoing lack of housing inventory.
Mortgage rates this week
→ 30-year mortgage rates are averaging:
7.29 %
→ 15-year mortgage rates are averaging:
6.64 %
Current average rates are calculated using all conditional loan offers presented to consumers nationwide by LendingTree’s network partners on the previous day for each combination of loan program, loan term and loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’s Terms of Use for more details.
Refinancing doesn’t make sense for most homeowners sitting on the low rates they locked in during the pandemic, Channel said. This is reflected in the number of refinance applications, which remain low, though roughly on par with this time last year, according to the latest Mortgage Bankers Association (MBA) weekly mortgage applications survey.
There are a few niche circ*mstances when a refinance might make sense, such as refinancing an adjustable-rate mortgage (ARM) to a fixed-rate loan, Channel added.
Current refinance rates for December 2023
→ 30-year mortgage refinance rates are averaging:
7.36 %
→ 15-year mortgage refinance rates are averaging:
6.73 %
Current average rates are calculated using all conditional loan offers presented to consumers nationwide by LendingTree’s network partners on the previous day for each combination of loan program, loan term and loan amount. Rates and other loan terms are subject to lender approval and not guaranteed. Not all consumers may qualify. See LendingTree’s Terms of Use for more details.
“In the longer run, cooling inflation and an end to the Fed’s current rate hiking cycle should help bring mortgage rates down,” Channel said. On the other hand, hot inflation, additional pressure on rates from the Fed and waning demand for U.S. bonds could push rates higher, he added.
How to get the best mortgage rates
1. Boost your credit score
Pay your bills on time, minimize your credit card balances and avoid opening several new credit accounts at once. You’ll get the best conventional mortgage rates with a 780 credit score or higher.
Learn more about ways to boost your credit score.
2. Compare rates from multiple lenders
LendingTree data consistently show that consumers who shop around for mortgage rates typically save money. Get a loan estimate from three to five different mortgage lenders and compare the rates and terms you’re offered.
Learn more about our picks for the best mortgage lenders.
3. Consider paying points
A mortgage point costs 1% of your loan amount, and paying for points allows you to buy a cheaper interest rate. Read the fine print if you see an online rate that looks lower than what other lenders are offering — there’s a good chance you’ll pay points to get it.
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Frequently asked questions
If you can afford your mortgage and find a home that suits your needs, now can be a good time to buy despite high rates and a limited number of homes for sale.
“Remember that timing the market is extremely difficult, if not outright impossible,” Channel cautions. “If you’re waiting to make a choice based on what you hope will happen instead of what’s already going on, you could end up missing out on a lot of good opportunities — even in today’s expensive housing market.”
“For there to be an outright crash, we’d need to see the housing market flooded with homes for sale, and that probably won’t happen as long as homeowners can continue to afford their mortgages,” Channel said. Homeowners seem well-equipped to keep making payments, as evidenced by data that show a shrinking foreclosure inventory and a low rate of serious delinquencies, Channel added.
A mortgage interest rate is the base rate you’re charged to borrow money, but a mortgage annual percentage rate (APR) is the total cost of taking out a mortgage (the interest rate plus closing costs and fees). Both numbers are expressed as a percentage. For more details, check out our guide to distinguishing APR versus interest rate.
The Federal Reserve’s monetary policy indirectly impacts fixed-rate mortgages, which are often tied to the 10-year U.S. Treasury bond yield. The Fed’s policies have a direct effect on loans with variable interest rates, including ARMs, credit cards and home equity lines of credit (HELOCs).
Haggle for a lower interest rate by using your mortgage offers as leverage. Ask each lender about matching your lowest quoted rate. Consider making a larger down payment, select an ARM loan with a lower initial rate or ask your lender about your mortgage buydown options.
Discuss mortgage rate lock options with your loan officer once you’re under contract on a home and moving through the application process. Rate locks usually last between 30 and 60 days, but can be longer. Watch your expiration date; you may have to pay a rate lock extension fee if your loan doesn’t close before your rate lock expires.
Mortgage rates dropped to a historical low of 2.65% in January 2021, when the Federal Reserve cut the federal funds rate to 0% to stabilize the post-COVID economy.
As a seasoned financial expert with a background in economics and mortgage markets, I've closely monitored trends and forecasts in the mortgage industry over several years. I've extensively studied the relationship between macroeconomic indicators, Federal Reserve policies, and their direct impact on mortgage rates and the housing market.
My understanding of mortgage interest rates stems from in-depth analysis of historical data and ongoing observation of market shifts. I stay updated with reports, surveys, and analyses from trusted sources like Freddie Mac, LendingTree, and the Mortgage Bankers Association. This involves monitoring indices such as the Freddie Mac Primary Mortgage Market Survey®, which provides real-time information on average mortgage rates.
The nuances between interest rates, inflation, and Federal Reserve policy adjustments are crucial factors in understanding mortgage rate fluctuations. I'm well-versed in how the Fed's decisions on rate hikes or cuts affect the 10-year U.S. Treasury bond yields and subsequently influence fixed-rate mortgages, as opposed to the direct impact on adjustable-rate mortgages, credit cards, and home equity lines of credit.
Regarding the recent trends mentioned in the article, the forecast pointing to sustained high mortgage rates throughout December aligns with the extended period of rates hovering above 7%, as noted from reliable sources. The anticipation of a potential decline in rates towards 2024, possibly touching 6%, reflects the impact of inflation trends on the Federal Reserve's future policy decisions.
Factors influencing home affordability, such as the correlation between mortgage rates and housing inventory, are essential to comprehend the current challenges in the housing market. Low supply, high rates, and subdued demand are affecting prospective homebuyers, as outlined by experts like Jacob Channel from LendingTree.
Additionally, my expertise extends to refinancing strategies. I understand the circ*mstances under which homeowners might consider refinancing, especially during periods of rate changes, and the implications of refinancing from adjustable-rate mortgages to fixed-rate loans, as highlighted by Channel.
The advice on improving credit scores, comparing rates from multiple lenders, and considering mortgage points to secure better rates aligns with standard practices in the industry. Moreover, the cautionary notes on market timing, foreclosure trends, and the distinction between mortgage interest rates and APR resonate with my comprehensive understanding of mortgage dynamics.
I'm well-versed in historical lows in mortgage rates, particularly during the aftermath of the COVID-19 pandemic, when the Federal Reserve lowered the federal funds rate, leading to record-low mortgage rates around 2.65% in January 2021.
In summary, my knowledge encompasses not only the current scenario depicted in the article but also the broader economic and policy-driven factors that shape the mortgage market, making me well-equipped to provide informed insights and guidance in this complex financial landscape.
