Mortgage Interest Rates Forecast
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Mortgage rates this week
Mortgage rates took a significant tumble the week ending Dec. 5. This marks a second week of downward movement.
The 30-year fixed-rate mortgage averaged 6.59% APR, down 21 basis points from the previous week's average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.
The 15-year fixed-rate mortgage averaged 5.85% APR, down 13 basis points from the previous week's average.
The 5-year adjustable-rate mortgage averaged 7.25% APR, down 20 basis points from the previous week's average.
Home buyers have been waiting anxiously for mortgage interest rates to drop, and now they're finally falling just as many people's minds have turned toward the holidays. It's unfortunate timing — and the trend may not even last. Though markets are still predicting a 25-basis-point rate cut from the Federal Reserve later this month, that Fed meeting might not bring good news. "It will come with commentary and economic projections that could shift mortgage rates in either direction," Kara Ng, senior economist at Zillow Home Loans, noted in a statement. If Fed officials downgrade their expectations for the new year, that could spell trouble for mortgage rates.
December mortgage rate forecast
Mortgage interest rates are likely to remain about the same in December, with the 30-year fixed-rate home loan staying between 6.75% and 7%.
Except for some volatility during the week after the election, mortgage rates were fairly steady in November, as economic indicators didn't pull any surprises. The inflation rate landed within expectations. The Federal Reserve steered the path it had mapped out. Nothing happened to push rates into an upward or downward path.
Look for December to repeat November's performance, featuring steady inflation indicators and an unsuspenseful Fed announcement on Dec. 18. As of late November, there was uncertainty over what the Fed might do. Investors thought the central bank was a little more likely to cut the federal funds rate by a quarter of a percentage point than to keep it unchanged. The Federal Reserve will work to dispel that uncertainty in the first half of December.
