Mortgage rates continue a downward trend in the twilight of 2023

As we prepare to bid adieu to 2023, mortgage rates this week again stayed below seven percent.

The 30-year fixed-rate mortgage averaged 6.61% as of Dec. 28, a slight decrease from the 6.67% rate recorded on Dec. 21 according to Freddie Mac‘s Primary Mortgage Market Survey released on Thursday.

The 15-year fixed-rate mortgage averaged 5.93% this week, down from 6.95% one week ago.

HousingWire’s Mortgage Rates Center showed Optimal Blue’s average 30-year fixed rate on conventional loans at 6.56% on Thursday, down from 6.68% recorded at the same time last week.

“The rapid descent of mortgage rates over the last two months stabilized a bit this week, but rates continue to trend down,” said Freddie Mac Chief Economist Sam Khater in a statement. “Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market.”

One year ago this week, the 30-year fixed-rate mortgage stood at 6.42%, while the 15-year rate stood at 5.68%, reflecting a slightly stronger rate environment ahead of the increases observed throughout 2023.

2024 predictions

Challenges felt this year will persist into 2024 though rates will moderate, according to multiple analysts who spoke to HousingWire. While not universal, many analysts expressed a belief that rates will be lower by this time next year.

“Obviously, this cycle was fast and furious – for lack of a better term – in terms of how quickly rates went up, and volumes basically got cut into a third of what they were two-plus years ago,” said Kyle Joseph, a specialty finance equity research analyst at Jefferies. “It really sent shockwaves through the industry. […] If anything, every day seems to be a higher likelihood that rates are not going higher next year.”

Warren Kornfeld, senior vice president of the financial institutions group at Moody’s, added that he expects rates “will moderate down to about 6% to 6.25%.” Meanwhile, Keefe, Bruyette & Woods (KBW) Managing Director Bose George was slightly more cautious, predicting an average of 6.75%.