Current Mortgage Rates Today: Dec. 8, 2023
30-year fixed mortgage rate: 6.953%
Mortgage pricing will go up today and for good reason. The jobs report came in better than anticipated, as the unemployment rate fell to 3.7% and the U.S. created 199,000 jobs. The 10-year Treasury yield rose on the news and is currently at 4.22%. However, we never needed a job-loss recession to slow the growth rate of inflation; the Fed was wrong the entire time and they can cut rates next as they’re still in a restrictive policy mode.–Logan Mohtashami, HousingWire Lead Analyst
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December 8, 2023
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Rates on this page are updated in real-time based on data from Optimal Blue. Optimal Blue data is calculated using actual locked rates with consumers across 42% of all mortgage transactions nationwide. Rates are inclusive of locks that occur below par, at par, and above par, and therefore consider discounts and rebates. For more information on data products provided by Optimal Blue, please navigate here.
Mortgage Rates News
Not only did home prices not crash this year, they got back to all-time highs and the number of homes taking price cuts is less than 2022.
Frequently Asked Questions
What determines mortgage rates?
Mortgage rates are influenced by a number of important factors, but the primary driver is movements in the 10-year Treasury bond yield. Mortgage rates can also be influenced by inflationary pressures, macroeconomic conditions, Federal Reserve policy and housing market conditions. However, Treasury bonds and mortgage rates have tended to track each other’s movements since 1971.
The 10-year yield is driven by economic factors like GDP growth, the job market, consumer prices and inflation expectations. Inflation eats into consumers’ borrowing power. Mortgage pricing tends to spike in times of high inflation because lenders have to set rates at a level where they can still profit on loans they originate while accounting for consumers’ deflated purchasing power.
The mortgage-backed securities (MBS) market is where the business risk of originating mortgages resides. If there is more risk to the mortgage rate market, the spreads widen, causing higher rates than normal in relation to the 10-year Treasury yield. The lower the risk, the smaller the spread in rates.
A borrower’s credit score, history, down payment amount and financial profile also determine what mortgage rate offers they will get. If a borrower has a high debt-to-income ratio — meaning the amount of debt they’re paying on credit cards, auto loans, student loans and other types of loans takes up a significant portion of their gross monthly income — then lenders consider them a higher borrowing risk. As a result, they will offset that risk by charging a higher mortgage rate in case the borrower defaults on the mortgage. Similarly, the lower a borrower’s credit score or down payment amount, the higher their mortgage rate will be due to their enhanced default risk.
How do mortgage rates affect the housing market?
When mortgage rates increase, homebuyers may face affordability challenges due to the higher costs of taking out a home loan. In 2023, higher mortgage rates (along with higher home prices) have stifled homebuyer demand as well as kept existing homeowners who might benefit from a refinance on the sidelines. When mortgage rates are lower, however, homebuyer demand can rise because their borrowing costs go down and they have more wiggle room in their home-buying budgets.
What is the Federal Reserve's role in determining mortgage rates?
The Federal Reserve doesn’t directly set mortgage rates, however, it sets benchmark federal funds rates that impact shorter-term forms of consumer borrowing, such as home equity lines of credit, or HELOCs. The federal funds rate is heavily influenced by economic trends and news and tends to move in the same direction with mortgage rates, but in a much slower fashion. Sometimes, the federal funds rate leads while mortgage rates follow, and vice versa. And, in some instances, they can move in opposite directions.
- When will mortgage rates go down?
What will mortgage rates be in 2024?
Mortgage rates in 2024 are expected to reach 6.1% by the end of 2024, according to the MBA’s forecast. The MBA estimates the spread between mortgage rates and 10-year Treasury rates to be about 120 basis points wider than normal. The MBA is forecasting mortgage rates to fall even further in the future, hitting 5.5% by the end of 2025.
Mortgage rate forecasts vary depending on the source. In 2024, mortgage rates will remain above 6.5%, according to Realtor.com’s forecast. Meanwhile, Lawrence Yun, chief economist with the National Association of Realtors (NAR), estimates mortgage rates to range from 6% to 7% by spring 2024.
How do mortgage professionals communicate mortgage rate changes to borrowers?
The best way to explain mortgage rate changes to borrowers is the movement in the 10-year Treasury yield, but a variety of factors can affect that movement daily. The first would be changes in U.S. economic data like monthly labor reports, unemployment figures or consumer prices. Also, inflation reports are essential to mortgage rates as the market anticipates Fed policy around the inflation growth rate.
We can also have rates move if a Fed president makes a hawkish or dovish statement that the media shares with the market. A geopolitical event (such as the conflicts in Ukraine and Israel) can also move rates within a day. On occasion, a bad or good day in the mortgage-backed securities market can push rates higher or lower than we’d see during normal market trading.
It’s also worth explaining how a borrower’s credit score and financial profiles impact the mortgage rates they qualify for. For instance, the lower a borrower’s credit score, the higher their rate will be to offset the increased risk they might present to lenders. Likewise, if a borrower has a high debt-to-income ratio or too much consumer debt and a low down payment amount, that can also affect their chances of getting lower, more competitive mortgage rate offers.