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Mortgage Rates Decrease to 3.05 Percent in Response to Fears About Omicron

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According to a recent article on HousingWire, the average 30-year-fixed rate mortgage decreased to 3.05 percent during the week ending Dec. 23, down from 3.12 percent the week before, according to the latest Freddie Mac PMMS Mortgage Survey. A year ago, the average 30-year fixed-rate mortgage was 2.66 percent

Last week, the average 15-year fixed-rate mortgage was 2.30 percent, down from 2.34 percent the week before. It was 2.19 percent a year ago at this time. The 10-year Treasury yield, which fell to 1.46 percent on Dec 22 from 1.47 percent the week before, tends to move in lockstep with mortgage rates.

The analysis focuses on conventional, conforming, fully amortizing home purchase loans for borrowers with a 20% down payment and good credit.

According to Sam Khater, chief economist at Freddie Mac, the COVID-19 Omicron variation is causing market instability. Despite the rate cut last week, rates are expected to increase in 2022.

In 2021, the housing market proceeded steadily. However, rates are expected to increase in 2022, which will impact homebuyer demand and refinance activity.

Economists anticipate that rates will begin to rise in 2022, but will remain at record lows. According to the Mortgage Bankers Association (MBA), 30-year mortgage rates will hit 4% by the end of 2022.

The Federal Reserve announced that it would begin dialing back its monthly bond purchases — which are intended to lower long-term rates — to combat accelerating inflation. That move could raise borrowing costs across the economy in the coming months.

In 2022, rising mortgage rates have begun to sap demand. According to the MBA, mortgage applications fell 0.6% for the week ending Dec. 17. The purchase index fell 3.3%, while the refinance index increased 2.2% from the week prior.

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