December Mortgage Outlook: A Gift of Stability
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Mortgage interest rates are likely to remain about the same in December, with the 30-year fixed-rate home loan staying between 6.75% and 7%.
Except for some volatility during the week after the election, mortgage rates were fairly steady in November, as economic indicators didn't pull any surprises. The inflation rate landed within expectations. The Federal Reserve steered the path it had mapped out. Nothing happened to push rates into an upward or downward path.
Look for December to repeat November's performance, featuring steady inflation indicators and an unsuspenseful Fed announcement on Dec. 18. As of late November, there was uncertainty over what the Fed might do. Investors thought the central bank was a little more likely to cut the federal funds rate by a quarter of a percentage point than to keep it unchanged. The Federal Reserve will work to dispel that uncertainty in the first half of December.
What others predict
Fannie Mae (a company that bundles and securitizes home loans) and the Mortgage Bankers Association expect mortgage rates to stay about the same in December. Both organizations predict that the 30-year mortgage will average 6.6% in the final three months of 2024. That would require mortgage rates to average around 6.75% in December — about the same as in November.
Some forecasters think rates will slip lower. "I do expect to see rates come down some in December," says Lisa Sturtevant, chief economist for Bright MLS, a database of properties for sale in the mid-Atlantic region. She says this is especially the case if economic data suggest weakening in the economy — for example, if the inflation rate comes in lower than expected.
Lawrence Yun, chief economist for the National Association of Realtors, notes that the Fed might cut short-term interest rates more than once over the coming months. If that happens, mortgage rates could drop, too, he says. But he stops short of predicting when.
What happened in November
In November I wrote that "rates are unlikely to move much in November until the result of this year's presidential election is clear and broadly accepted — even if it takes time to reach a consensus." My assumptions proved wrong.
As it turned out, the election's result was acknowledged within a day. Then rates went on an up-down-up-down course within a narrow range. The 30-year mortgage averaged 6.81% in November in Freddie Mac's weekly survey, up from 6.43% in October.
Looking ahead to 2025
Few people buy homes in December and January. This winter’s housing market might be especially cold, with a change in presidential administrations coming Jan. 20, and an expectation that mortgage rates could fall.
"People may be waiting until 2025 just to have a little bit more certainty and a little bit more faith that rates will be lower than they are now," Sturtevant says.
