Following an interest rate hike from the Federal Reserve and a surprisingly strong jobs report, mortgage rates increased slightly this week. The 30-year fixed-rate continues to hover close to six percent, and interested homebuyers are easing their way back to the market just in time for the spring home buying season.

Primary Mortgage Market Survey®
U.S. weekly averages as of 02/09/2023

30-Yr Fixed Rate Mortgage: 6.12% 1-Yr change 2.43%

15-Yr Fixed Rate Mortgage 5.25% 1-Yr change 2.32%

Source: Freddie Mac

The economy may not yet be in a recession, but the housing market is. U.S. home sales have declined for nine straight months. That’s the longest losing streak since the National Association of Realtors began tracking that data in 1999.

Aspiring home buyers saw signs of hope for greater affordability this week as the average 30-year mortgage rate dropped to 6.49%, Freddie Mac reports. Recent economic data suggests mortgage rates have peaked after surpassing 7% in the second week of November.

Freddie Mac reports the following national averages with mortgage rates for the week ending Dec. 1:

30-year fixed-rate mortgages: averaged 6.49%, dropping from last week’s 6.58% average. Last year at this time, 30-year rates averaged 3.11%.

More people are expanding their home search away from urban centers and toward smaller towns and rural areas, NAR data shows

House hunters have been expanding the scope of their home search over the past year, moving a median of 50 miles away from their previous property—a record distance, according to the National Association of REALTORS®’ 2022 Profile of Home Buyers and Sellers. The historical average is about 15 miles.

With the rate for a 30-year mortgage rising to 7.08% this week—the highest average since April 2002, according to Freddie Mac—the average monthly loan payment is now $1,000 more than a year ago, Nadia Evangelou, senior economist and director of forecasting for the National Association of REALTORS®, writes on the Economists’ Outlook blog.

Mortgage rates, now at a 20-year high, combined with inflation and stock market volatility are causing housing markets to soften quickly. The next several months will be a critical test for the economy, experts say.

The higher rates are prompting the housing market to drastically slow: Pending home sales fell 24% last month compared to last year, and existing-home sales were down 20% annually in August.

“The uncertainty and volatility in financial markets is heavily impacting mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. He adds that home shoppers would be wise to shop around.

After the Federal Reserve raised its key short-term benchmark rate by another three-quarters of a percentage point on Wednesday, the average for the 30-year fixed-rate mortgage climbed to its highest level in 14 years, remaining above 6% and hitting more home buyers’ pocketbooks. It’s the fifth time this year the Fed has taken aggressive action to try to tame 40-year-high inflation.

As mortgage rates surge and remain volatile, it’s becoming increasingly necessary for home buyers to shop around for a loan to find savings. According to Freddie Mac, borrowers potentially could save an average of $1,500 over the life of a loan by gathering one additional rate quote from a lender. And borrowers could save even more by gathering five different quotes from lenders—up to $3,000, Freddie Mac research shows.

“Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy due to elevated inflation,” said Sam Khater, Freddie Mac’s Chief Economist. “Not only are mortgage rates rising but the dispersion of rates has increased, suggesting that borrowers can meaningfully benefit from shopping around for a better rate. Our research indicates that borrowers could save an average of $1,500 over the life of a loan by getting one additional rate quote and an average of about $3,000 if they get five quotes.”