Freddie Mac report shows mortgage rates lower at end of 2018

House and Money

If you and your family have resolved to purchase a new house in the new year, you should be encouraged by a recent report from Freddie Mac.

In the last full week of December, the government-sponsored mortgage corporation released the results of its Primary Mortgage Market Survey, which showed mortgage rates had continued their two-month decline, and were ending the year on a relatively low note after peaking in November.

According to this latest data, the 30-year fixed-rate average dropped from 4.62 percent the previous week to 4.55 percent the week ending on Dec. 27, with an average 0.5 points, or the fees paid to a lender, equal to 1 percent of the loan amount. The 30-year fixed-rate average had stood at 3.99 percent around the same time one year ago, but was still down nearly a full half of a percentage point from the high of 4.94 percent achieved in mid-November of this year.

Similarly, the 15-year fixed-rate average declined modestly to 4.01 percent with an average 0.4 points. That represented a .06 percent slide from the 4.07 percent that had been the average a week prior, but a .35 percent drop from the 4.36 percent high of Nov. 15, 2018. The 15-year fixed rate average was 3.44 percent one year prior.

30-year fixed-rate mortgages continued to fall throughout the month of December. 30-year fixed-rate mortgages continued to fall throughout the month of December.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage bucked the trend slightly, averaging 4.00 percent with an average 0.3 point, which represented a marginal increase from the week before, when it averaged 3.98 percent. At around the same time in 2017, the 5-year ARM averaged 3.47 percent.

What changing rates could mean for the housing market

"Rates continued their two-month slide and are currently hovering around the same level as the early summer, which was before the deterioration in home sales," said Sam Khater, Freddie Mac chief economist, in a statement. "The negative headlines around the financial markets are concerning but the economy remains healthy, so the drop in mortgage rates should stem or even reverse the slide in home sales that occurred during the second half of 2018."

The 4.94 percent peak that the 30-year fixed-rate average enjoyed in November of 2018 was its highest level in seven years. Since then, it has been trending down, despite the Federal Reserve hiking interest rates that could reasonably be expected to influence mortgage rates to move in the opposite direction.

Falling mortgage rates are not the only positive sign for would-be homebuyers. Housing prices are also moderating, as shown by the release of Case-Shiller home price index, which indicated that price growth had plateaued in October after rising the previous month, according to The Washington Post.

"The housing market slowdown that began in the second half of 2018 sets up a mixed bag for home buyers and sellers as we look at an uncertain 2019," Zillow senior economist Aaron Terrazas told the Post. "Slowing home price appreciation can be read by many as an ominous sign — a kind of canary in the coal mine — for a more general downturn to come, but it's not necessarily an indicator that the sky is falling. For the time being, this slowdown represents a return to fundamentals more than anything else, and to more balance between buyers and sellers."

Whether the recent decline in mortgage rates and housing prices presages a freefall for the housing market or simply represents more parity between buyers and sellers, those considering purchasing a new home should be pleased either way.

If you would like to take advantage of low fixed-rate mortgages, or any specialty mortgage or home loan type, contact Landmark Bank to discuss your options.

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