Mortgage Rates Decline to 6.58%: Freddie Mac

Money; Getty Images
Money; Getty Images

Mortgage rates extended last week’s decline.

The average rate on a 30-year fixed-rate mortgage is 6.58%, a decrease of 0.03 percentage points according to Freddie Mac’s weekly report. This is the second week in a row that the 30-year rate has moved lower.

“Mortgage rates continued to tick down heading into the Thanksgiving holiday,” said Sam Khater, Freddie Mac’s chief economist in a statement. “In recent weeks, rates have hit above 7% only to drop by almost half a percentage point. This volatility is making it difficult for potential homebuyers to know when to get into the market, and that is reflected in the latest data which shows existing home sales slowing across all price points.”

The 15-year fixed-rate mortgage also decreased this week, moving 0.08 percentage points lower to 5.90%.

Mortgage rates remain high

Mortgage rates have been volatile this year thanks inflation and the Federal Reserve.

While the Fed does not directly set mortgage rates, it sets the federal funds rate (the interest rate banks charge each other for short-term loans). When that rate increases, rates on consumer debt like mortgages increase too. Concerns about inflation have led the Fed to hike the federal funds rate from 0% in March to 4% in November.

Rates were near all-time lows at the start of the year, so some increase was expected. However, the speed of the increases took the housing market by surprise. The 30-year rate began the year at 3.22% and is currently sitting at 6.58%, more than double the starting rate.

Today’s higher rates are in stark contrast to the last two years when mortgage rates plummeted amid the COVID-19 pandemic. The average 30-year mortgage rate in 2022 was 2.96%. So far this year, the 30-year rate is averaging slightly above 5%.

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