Today's Mortgage Rates - 12/12/2024

Continued Rate Retreat

Mortgage rates declined for a third consecutive week.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) decreased by nine basis points (0.09%) to 6.60%. remaining at mid-late late October levels.

Average offered rates for 15-year fixed-rate mortgages managed a twelve basis point (0.12%) decline, leaving the most popular short-term mortgage at 5.84%, also settling to where is was around Halloween.

A 5/1 ARM might offer a homebuyer slightly lower-cost alternative to a long-term fixed-rate mortgage, and the difference in rate between 30-year FRMs and 5/1 ARMs expanded this week. The Mortgage Bankers Association reported that the initial fixed interest rate on a hybrid 5/1 ARM posted a forty-three basis point (0.43%) fall to 5.81% this week. The current 79 basis point gap compared to a long-term fixed-rate loan renders the choice of this ARM somewhat more compelling for homebuyers seeking a break on monthly payments.

New inflation data out this week was about as expected, if perhaps a touch warmer, and the annual trend for prices has been flat at an elevated level for months now. Even so, futures markets remain steadfast in their belief that the Fed will cut rates by a quarter percentage point at their meeting next week. If that turns out to be the case, what may matter more for the direction of mortgage rates through the late winter and into 2025 will be what the Fed says about the prospects for lower rates next year.

Certainly, the central bank will have much to discuss, and members will be revealing their thinking about the trajectory for economic growth, unemployment, inflation and how they think they will be adjusting policy in 2025 and beyond. We think that the decision any decision on changing policy next week will be a close one, given recent economic, labor and inflation trends.

Investors haven't exactly shrugged off the firming in inflation, and a report covering November import and export prices is still due tomorrow. So far this week, the influential yield on the ten-year U.S. Treasury has firmed up rather a bit after the November Consumer and Produce Price reports, and that's adding some upward pressure for mortgage rates at the moment. Expect to see them edging higher over coming days.

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.