As has been discussed, information compiled by Freddie Mac shows that mortgage rates reversed coursed in December. The 30-year FRM – Commitment rate, which had been increasing since August, fell by 23 basis points to 4.64 percent from 4.87 percent in November.
The Federal Housing Finance Agency reported that the contract rate for newly-built homes, inched up two basis points to 4.79 percent in December. Mortgage rates on purchases of newly built homes (MIRS) declined by three basis points over the month of December to 4.83 percent from 4.86 percent in November.
After increasing the federal funds rate to 2.25 percent to 2.50 percent at the December Federal Open Market Committee meeting, the Fed remains cautiously on track to continue its gradual approach to raising interest rates with one or two possible rate hikes in 2019.
Since the beginning of January, the 10-year Treasury rate, has slightly recovered to 2.76% but lower than 3.21% at the start of November. This decline has contributed to the mortgage interest rates reductions in the last few weeks. The average market rate, according to Freddie Mac, was 4.45% at the end of January.
Anecdotal data suggests that the decline in rates may have spurred some purchases, particularly in January, but ongoing economic uncertainty continues to hold some prospective home buyers back.