How low will they go? Not as low as 2021 and 2022, but after months on the rise, we’re finally seeing reasonable declines in the average mortgage rate. In fact, as of December 8, rates are below 7 percent—the lowest level since August.
“Slower inflation, and financial markets anticipating the potential end of the Fed’s hiking cycle, are both behind the recent decline in rates,” said Joel Kan, the Mortgage Bakers Association’s Vice President and Deputy Chief Economist.
And the slowdown is increasing mortgage interest. According to the MBA, mortgage applications increased 2.8 percent from one week earlier for the week ending December 1. The Refinance Index increased 14 percent from the previous week and was 10 percent higher than the same week one year ago.
“Refinance applications saw the strongest week in two months, increasing on a year-over-year basis for the second consecutive week for the first time since late 2021,” Kan said. “The overall level of refinance applications is still very low, but recent increases could signal that 2023 was the low point in this cycle for refinance activity, consistent with our originations forecast. Purchase applications remained 17 percent lower than a year ago, held back by low inventory and still-challenging affordability conditions.”