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Mortgage rates continue trending down before Christmas

Mortgage rates stayed below 7% for the second week in a row, a welcome relief after a 17-week streak of above-7% rates. This week’s dip is the largest weekly drop since November 2022.


The 30-year, fixed mortgage rate averaged 6.67% for the week ending Dec. 21, according to Freddie Mac‘s Primary Mortgage Market Survey. That’s down from last week’s 6.95% and up from 6.27% the same week a year ago. Meanwhile, HousingWire’s Mortgage Rates Center showed Optimal Blue’s average 30-year fixed rate on conventional loans at 6.68% on Thursday. 



“Lower rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market and builders already are starting to feel the positive effects,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “A rise in homebuilder confidence, followed by new home constructionreaching its highest level since May, signals a response to meet heightened demand as current inventory remains low.”

Lower rates will have a positive impact on affordability, Lisa Sturtevant, chief economist at Bright MLS, said in a statement. Bright MLS forecasts the average on a fixed-rate mortgage rate to fall to 6.5% by mid-year and to decline further to 6.2% by the end of next year. With a rate of 6.2%, the typical monthly payment on a loan for a $400,000 home would be about $2,700, down from $3,000 with a 7.5% rate.

Another obstacle? Lack of inventory

The scarcity of available homes has kept home prices elevated. In 2023, many first-time homebuyers had to delay their home-buying plans as they scrambled to save enough money for a downpayment. They often had to bid on multiple houses before being successful, Sturtevant said. Some prospective homebuyers were simply priced out of the market.

While declining rates is a positive for homebuyers, the lack of inventory—both because of a deficit of new construction and because existing homeowners are remaining in the homes longer—will continue to be a challenge in 2024,” Sturtevant said.  

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