Freddie Mac – Mortgage Rates Continue to Fall, Hitting Lowest Level Since Mid-September – Economic Research

Freddie Mac Mortgage Rates – January 26, 2023

What Happened to Mortgage Rates This Week:

The Freddie Mac fixed rate for a 30-year loan continued to trend down, to 6.13%, the lowest level since mid-September. While businesses and investors are watching the market closely, the recent large-scale layoffs in the tech sector combined with Monday’s stock market rebound have created mixed signals. On one hand, many cash-burning tech companies are struggling with the Fed’s rate hikes. On the other hand, investors are happy about slowing inflation and anticipate that interest rate hikes may begin to moderate or stabilize in the months ahead. The nearly half-century low unemployment rate (3.5%) and the cooling inflation rate (6.5%) do not point toward a recession. However, it’s important to keep in mind that monetary policy takes time to have an impact, and these economic indicators might not yet show the full effects of the restrictive policy.   

Next week, the Federal Reserve is expected to announce a smaller increase in the Fed Funds rate, with a 25 basis point hike, compared with the 50 and 75 basis point increases in the previous meetings. The slower rate increase is encouraged by the recent moderation in wage growth, which may still need to decrease further to reach the desired inflation rate of 2%. While the Fed may continue to raise rates this year, reaching just above 5% from the current range of 4.25% to 4.5%, the slower pace will help to create a soft landing for the economy by balancing the risks of bringing down inflation without pushing up the unemployment rate.

What it Means:

Despite slowing inflation, the expected ongoing restrictive monetary policy may keep mortgage rates in the 6%-7% range in the short term. With concerns about high home prices and high mortgage rates affordability remains at the center of the latest hottest housing market report.

In addition to high costs, concerns about economic uncertainty also had many buyers pausing their purchasing decisions and led to fewer transactions. However, decreased competition may have presented opportunities for some first-time home buyers, whose share of purchases increased slightly to 31% in December 2022, compared to 28% in November.’s Best Markets for First-Time Homebuyers in 2023 identified pockets of affordability in all four regions of the country, particularly in the northeast, where renters looking to become homeowners in 2023 might be able to find a deal.

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