Instant Reaction: Mortgage Rates, December 21, 2023

Mortgage interest rates continued to incrementally decline today, dropping to 6.67% from 6.95% last week. For a $400,000 home, this is a monthly mortgage payment of $2,059—a monthly savings of $242 from when rates were at 7.79% in October. Mortgage interest rates for the 30-year fixed are also nearly a full percentage below the historical average since 1971 of 7.74%.

First-time buyers traditionally fare better in the winter, as there is less competition from families in the home-buying market. November’s REALTORS Confidence Index shows first-time buyers up at 31% from 28% the past month. This represents a buying period when mortgage rates were still high. As rates ease considerably, can first-time buyers edge even closer to the norm (38% since 1981)?

Home buyers who have been priced out in the last year should find optimism in 2024.