A sharp drop in mortgage interest rates in December may have kick-started this year’s spring housing market early, reports CNBC.
Optimism about mortgage rates increased sharply in December, according to a monthly consumer survey by Fannie Mae. For the first time since the survey was launched in 2010, more homeowners on net believe rates will go down rather than up, according to Mark Palim, deputy chief economist at Fannie Mae.
“This significant shift in consumer expectations comes on the heels of the recent bond market rally,” Palim says. “Notably, homeowners and higher-income groups reported greater rate optimism than renters.”
The average rate on the 30-year fixed has been on a wild ride since the start of the COVID pandemic. It hit more than a dozen record lows in 2020 and 2021, below 3%, causing a historic run on homebuying and a sharp rise in prices, only to then more than double in 2022. Rates hit a more than 20-year high in October 2023, hovering around 8% before falling back below 7% in December. Rates, however, are still twice what they were three years ago.
