Borrowing costs have been dropping over the last few weeks, but some home buyers may be waiting for further declines.
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The 30-year fixed-rate mortgage averaged 7.03% this week, but some aspiring home buyers are remaining on the sidelines. Mortgage applications for home purchases barely budged in the latest week and are 17% lower than a year ago, despite the recent decreases in borrowing costs, the Mortgage Bankers Association reported this week.

“When rates began to rapidly drop, purchase applications rebounded initially, but this improvement in demand diminished in the last week,” says Sam Khater, Freddie Mac’s chief economist. “Although these lower rates remain a welcome relief, it is clear they will have to further drop to more consistently reinvigorate demand.”

Just six weeks ago, mortgage rates were hovering at 20-year highs and pushing toward 8%. Over recent weeks, rates have fallen and at today’s average rates are resulting in about $166 in savings to a monthly mortgage payment on a $400,000 home, notes Jessica Lautz, deputy chief economist at the National Association of REALTORS®.

“This is considerable, and buyers who have been priced out may start to trickle back in,” Lautz says. “For home buyers who are taking on a mortgage to purchase a home and have been wary of the autumn rise in mortgage rates, the market is turning more favorable and there should be optimism entering 2024 for a better market.” (NAR will host the Real Estate Forecast Summit on Dec. 12, offering predictions for the housing market in the new year.)

With borrowing costs coming down, buyers still face another hurdle to homeownership: Finding a home to buy. The for-sale market remains limited, which may be curtailing some housing demand. Further, despite the slower housing market, home buyers still navigate multiple offer situations and competition from other buyers.

Freddie Mac reports the following national averages for the week ending Dec. 7:

  • 30-year fixed-rate mortgages: averaged 7.03%, falling from last week’s 7.22% average. Last year at this time, 30-year rates averaged 6.33%.
  • 15-year fixed-rate mortgages: averaged 6.29%, dropping from last week’s 6.56% average. A year ago, 15-year rates averaged 5.67%.