In December, mortgage interest rates are expected to hold steady, with the 30-year fixed-rate home loan hovering between 6.75% and 7%.
During November, despite a small hiccup following the election, mortgage rates were relatively stable. Economic indicators remained as anticipated and the inflation rate was on target. The Federal Reserve maintained its previously set direction, leading to no significant shifts in rates.
December is likely to mirror November’s stability, with consistent inflation indicators and an uneventful Fed announcement expected on December 18. Late November brought some uncertainty regarding the Fed’s actions, as investors speculated that the central bank might lean slightly towards a quarter-point cut in the federal funds rate rather than keeping it unchanged. However, the Federal Reserve is expected to clear up this ambiguity in early December.
Looking at predictions from other analysts, Fannie Mae and the Mortgage Bankers Association are both forecasting that mortgage rates will remain largely unchanged through December. Both organizations anticipate that the 30-year mortgage will average 6.6% in the final quarter of 2024, which would require rates to stay around 6.75% for the month of December, mirroring November’s figures.
Some experts, however, believe rates might dip in December. Lisa Sturtevant, Chief Economist for Bright MLS, expects a slight drop, particularly if economic data indicates a weakening economy, such as a lower-than-expected inflation rate.
Lawrence Yun, Chief Economist for the National Association of Realtors, suggests that the Fed might lower short-term interest rates several times in the upcoming months. If that happens, mortgage rates could also decrease, though he hesitates to predict exactly when this might occur.
Reflecting on November, I initially thought that rates would remain stable until the presidential election results were fully accepted. I was, however, proven wrong as the election outcome was acknowledged swiftly, and rates fluctuated slightly within a narrow range. According to Freddie Mac’s weekly survey, the average rate for a 30-year mortgage in November was 6.81%, up from 6.43% in October.
Looking forward to 2025, while not many people buy homes in December and January, this winter could be particularly slow. With a change in the presidential administration on January 20 and the potential for lower mortgage rates, the housing market might see a chillier season.
“Many may hold off until 2025 for more certainty and the hope that rates will decline,” Sturtevant comments.
