Today's Mortgage Rates - 12/12/2024

Downward Step For Mortgage Rates

Mortgage rates slid into the start of the holiday season.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) decreased by twelve basis points (0.12%) to 6.69%. returning to late October levels.

Average offered rates for 15-year fixed-rate mortgages managed a fourteen basis point (0.14%) decline, leaving the most popular short-term mortgage at 5.96%, about a six-week low.

A 5/1 ARM might offer a homebuyer slightly lower-cost alternative to a long-term fixed-rate mortgage, but the difference in rate between 30-year FRMs and 5/1 ARMs remains narrow. The Mortgage Bankers Association reported that the initial fixed interest rate on a hybrid 5/1 ARM posted a ten basis point (0.10%) fall to 6.24% this week. The current 45 basis point gap compared to a long-term fixed-rate loan renders the choice of this ARM rather less compelling for homebuyers seeking a break on monthly payments.

The economic data of late don't suggest much by way of change in what is a pretty solid pattern. Last week's report on inflation showed that price pressures did not wane in October, and the latest Job Openings and Labor Turnover Survey (JOLTS) showed an uptick in open positions, erasing nearly all of September's decline. Other broad indicators suggested a bit of a pick up in manufacturing activity but a softening in the service-sector side of the economy.

The Fed meets in about two weeks to decide policy. At a conference this week, Fed Chair Powell noted that the Fed "can afford to be a little more cautious [in cutting rates] as we try to find neutral." Futures markets place about a 70% chance that the Fed will cut rates by a quarter percentage point at the next meeting, but it may be the incoming reports on November employment conditions and consumer prices that determine whether the Fed moves or not. The employment report is due Friday; the CPI, next Wednesday.

In recent days, the bond yields that most influence mortgage rates have been fairly stable in a narrow range. That suggests we'll see little change in mortgage rates over the couple of days as investors (like the Fed) wait for data.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.