Mortgage Rates Remain Stable Amid Market Volatility
Mortgage rates exhibited minimal fluctuations this week, despite a significant stock market selloff that drove investors towards safe-haven assets. According to Freddie Mac, the average 30-year mortgage rate stood at 6.95% through Wednesday, compared to 6.96% the previous week. 15-year mortgage rates experienced a slight decrease, moving from 6.16% to 6.12%.
"Persistent high rates and insufficient housing supply continue to pose affordability challenges for homebuyers," stated Sam Khater, Freddie Mac's chief economist.
The market sell-off on Monday, triggered by Chinese startup DeepSeek's release of an affordable artificial intelligence model, caused investors to divest from US tech stocks and seek refuge in assets like US Treasurys. Treasury yields, which are closely tied to mortgage rates, initially declined sharply during the sell-off. However, they recovered somewhat on Wednesday following the Federal Reserve's decision to refrain from further interest rate cuts pending an assessment of inflationary trends.
"With the Fed on hold, we anticipate that long-term rates, including mortgage rates, will remain within a narrow range for the foreseeable future," remarked Mike Fratantoni, chief economist for the Mortgage Bankers Association.
Higher mortgage rates have impacted home sales, as evidenced by a 5.5% decline in housing contract activity in December compared to the previous month. The most significant decreases were observed in expensive markets such as the West and Northeast, where elevated rates have eroded affordability.