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Mortgage rates have surged to their highest levels since July 2024, starting the new year near 7%. The average 30-year fixed-rate mortgage climbed to 6.91%, while 15-year mortgage rates increased to 6.13%. This trend marks the third consecutive week of rising rates, posing significant challenges for prospective homebuyers in an already tough market.
Key Takeaways
- Average 30-year fixed mortgage rate: 6.91%
- Average 15-year mortgage rate: 6.13%
- Third straight week of rate increases
- Highest mortgage rates since July 2024
Rising Mortgage Rates
The latest data from Freddie Mac indicates that mortgage rates have continued to rise, with the average 30-year fixed-rate mortgage reaching 6.91% in the week ending Wednesday. This is an increase from 6.85% recorded just a week earlier. Similarly, 15-year mortgage rates saw a jump from 6% to 6.13%.
Sam Khater, Freddie Mac’s chief economist, noted that these rates are the highest they have been in nearly six months. He emphasized that the elevated rates, compared to the same time last year, are contributing to ongoing affordability challenges in the housing market.
Market Dynamics
The increase in mortgage rates comes at a time when many potential buyers are already feeling the pinch from high home prices. Despite these challenges, there are signs of resilience in the market. According to the National Association of Realtors, housing contract signings rose in November, reaching their highest level since early 2023.
However, the demand for mortgages has seen a significant decline in the final week of 2024. The Mortgage Bankers Association reported a sharp drop in applications, attributing this to the combination of the holiday season and rising rates. Specifically:
- Applications to purchase a new home fell by 13% compared to two weeks earlier.
- Refinancing applications decreased by 36%.
Seasonal Trends
Late December is traditionally one of the slowest periods for the housing market, as both buyers and sellers tend to pause their activities during the holidays and colder weather. This seasonal slowdown is reflected in the recent mortgage application data, which shows a marked decrease in activity.
Conclusion
As we move into 2025, the housing market faces significant headwinds due to rising mortgage rates and high home prices. While some buyers are still making moves in the market, the overall trend suggests a challenging environment for prospective homeowners. With rates nearing 7%, many may find themselves priced out of the market, leading to a cautious outlook for the year ahead.
