Weekly Mortgage Rates Dip as Latest Data Holds No Surprises
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Mortgage interest rates have continued their post-Thanksgiving downward trend. In the week ending Dec. 12, the average rate on the 30-year fixed-rate mortgage fell eight basis points to 6.51%, according to rates provided to NerdWallet by Zillow. A basis point is one-one hundredth of a percentage point.
If you were planning on asking Santa for a meager dip in mortgage rates, you just might get your wish. The latest Consumer Price Index (CPI) report was released on Dec. 10, reflecting a 2.7% increase in annual inflation for the 12-month period ending in November. This was directly in line with forecasters’ expectations, firming up projections for a 25-basis-point cut to the federal funds rate at the Federal Reserve’s next meeting on Dec. 18.
While the federal funds rate is separate from mortgage rates, it does influence them. It’s the interest rate banks pay to borrow from one another overnight, which they need to do in order to fund large transactions like mortgages. When banks think it’s about to become a little bit cheaper to borrow from each other, they usually make their own lending more affordable for consumers in turn.
Home shoppers should remember, however, that mortgage rates often move in anticipation of what the Fed will do — not necessarily after the fact. Mortgage rates might come down ever so slightly in the remaining weeks of the year, but probably not enough to convince prospective 2025 home buyers to pack up and move in the middle of the holiday season.
Taking advantage of a slow season
That said, the real estate market does typically slump during the holidays, when would-be sellers are more inclined to hang up twinkly lights than a “for sale” sign. Inventory may be limited, but if you’re determined to buy a house in the next couple of months, this is a particularly non-competitive time. Without other interested buyers, sellers may be more open to negotiating the sale price.
Negotiating power may be increasingly important for buyers to afford a home, as they might not be able to count on consistent rate cuts going forward. In a Dec. 11 report, Realtor.com’s chief economist Danielle Hale said, “I expect another quarter point rate cut decision in next week’s meeting; but today’s elevated inflation data put more emphasis on the path forward and suggest fewer rate cuts are likely ahead.”
