Mortgage Rates Remain Steady Despite Market Volatility
Mortgage rates held firm this week, despite a significant sell-off in the stock market. According to Freddie Mac, the average 30-year mortgage rate stayed at 6.95%, while 15-year rates declined slightly to 6.12%.
"Affordability challenges persist for many homebuyers due to these elevated rates and ongoing supply constraints," said Freddie Mac's chief economist, Sam Khater.
Despite Monday's market sell-off, which saw investors fleeing US technology stocks, mortgage rates remained unchanged. This resilience is attributed to the close correlation between Treasury yields and mortgage rates. While Treasury yields initially declined on Monday, they recovered on Wednesday after the Federal Reserve maintained its benchmark interest rate unchanged.
Mike Fratantoni, chief economist at the Mortgage Bankers Association, predicts that mortgage rates will remain within a narrow range "with the Fed on hold."
Meanwhile, higher rates have impacted housing sales. The National Association of Realtors reports a 5.5% decline in housing contract activity in December. The most significant decreases occurred in high-priced markets like the West and Northeast, where affordability challenges are amplified.