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Mortgage Rates Edge Higher to 6.73%

To close out 2022, the average 30-year fixed mortgage rate jumped to 6.73%, but mortgage rates on numerous other home loan types fell modestly. Adjustable mortgage rates fell, as did 10-, 15-, and 20-year mortgage rates.

As of December 29, the following are the current average mortgage rates, without discount points unless otherwise noted:

  • 30-year fixed: 6.73% (up from 6.65% a week ago).
  • 20-year fixed: 6.14% (down from 6.31% a week ago).
  • 15-year fixed: 5.82% (down from 5.87% a week ago).
  • 10-year fixed: 5.79% (down from 5.92% a week ago).
  • 5/1 ARM: 5.42% (down from 5.45% a week ago).
  • 7/1 ARM: 5.54% (down from 5.58% a week ago).
  • 10/1 ARM: 5.97% (down from 5.99% a week ago).
  • 30-year jumbo loans: 6.8% (up from 6.7% a week ago).
  • 30-year FHA loans: 6.2% with 0.45 point (up from 6.19% a week ago).
  • VA purchase loans: 5.98% with 0.07 point (up from 5.91% a week ago).

Indicator of the Week: Learning From Housing Market History

Mortgage rates rose in 2022 by a higher margin than any other year on record, per historical data from Freddie Mac’s Primary Mortgage Market Survey. The average rate on a 30-year fixed mortgage began the year at 3.22% in January and ended at 6.42% this past week. That’s an increase of 3.2 points, with rates currently twice as high as they were at the start of 2022.

The second-highest annual increase doesn’t even come close, at an increase of 2.52 points during the 1979 calendar year. But despite the meteoric rise in 2022, mortgage rates are much lower than they were in the late ’70s and early ’80s. Mortgage interest rates peaked at 18.63% in October 1981, compared with the record low of 2.65% set in January 2021.

Often, though, the largest rate changes don’t occur within the span of January to December. Mortgage rates rose from 10.48% to 16.35% between April 1979 and 1980, marking the sharpest year-over-year increase ever recorded. And this past November, the average rate surged to 7.08%, up from 2.98% the year prior. It’s a smaller margin at 4.1 points, but it translates to a nearly two-and-a-half-fold increase during that period.

So what happened to the housing market during these times of soaring mortgage rates, and what can we learn from history? A May 2022 study from the Urban Institute, an economic policy think tank based in Washington, found that while rapidly rising rates tend to slow the rate of home price appreciation, the relationship is relatively weak. Instead, home prices are more directly moved by strong economic growth and high inflation.

When mortgage rates rose rapidly during the late ’70s and early ’80s, home price appreciation decelerated but growth remained positive. Home prices did not fall until shortly after, when a recession was underway. So if the Federal Reserve can manage to stick a soft landing – that is, by tempering inflation without driving the U.S. economy into a recession – then higher home prices may be here to stay.

Additionally, during past periods of quick rate hikes, there wasn’t a housing supply shortage like we’re experiencing today. Constrained supply could keep home prices high, or at least keep them from decelerating as sharply in a historical perspective. And although home prices have already begun to slow (and even fall) in many coastal markets, buyers shouldn’t hold their breath for a substantial market correction nationally.

“In short, despite a sharp drop in affordability because of higher mortgage rates, home prices are unlikely to decline,” the report reads. “Rather, affordability challenges are likely to persist.”

One final thought from the report: Homebuyers recognize that while rent growth is likely to keep pace with inflation, monthly mortgage payments will stay fixed. “If you buy a home, you lock in the largest portion of your housing costs, limiting the impact of any future rental rate increases and relieving pressure on your purchasing power.” Unless you plan on relocating in the near future, buying a home may still offer better financial security in the long term.

In other news,

Highfield School Head ‘James Mukwirimba’ Sends Personal Assistant Mjolo Picture

James Mukwirimba, the headmaster of Kudzanayi Primary School, clashed with the woman’s husband, Crispen Zhou, after he saw the picture in messages sent to Privillage Zhou.

Highfield School Head'James Mukwirimba' Sends Personal Assistant Mjolo Picture

“We had a quarrel whereby Crispen was accusing me of dating his wife and he called me names.

“Out of anger, I told him that handidanane nemukadzi wako asi iwe ndiwe wandingatoita…continue reading

Written By

Kells is a conversant writer and digital marketer with a global portfolio of viral current events articles, gossip pieces, and thought-provoking opinion pieces. Kells is always pushing the boundaries of the media sector. If you'd like to share some of your gossip and experiences, or have your article included on , please contact Kells at [email protected]. Kells will take your narrative to the next level with his distinctive creative writing style.

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