Mortgage rates inch higher, but home-buying demand is growing

By Aarthi Swaminathan

'Affordability remains a major headwind for buyers,' Freddie Mac says

Mortgage rates rose slightly in the latest week, but that didn't deter home buyers.

The 30-year fixed-rate mortgage rose and averaged 6.66% as of January 11, according to data released by Freddie Mac (FMCC) on Thursday.

It's up 4 basis points from the previous week - one basis point is equal to one-hundredth of one percentage point.

A year ago, the 30-year was averaging at 6.33%.

The average rate on the 15-year mortgage was 5.87%, down from 5.89% last week. The 15-year was at 5.52% a year ago.

Freddie Mac's weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage.

Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging at 6.78% as of Thursday afternoon.

What Freddie Mac said: "Mortgage rates have not moved materially over the last three weeks and remain in the mid-six percent range, which has marginally increased homebuyer demand," Sam Khater, chief economist at Freddie Mac, said in a statement.

"Even this slight uptick in demand, combined with inventory that remains tight, continues to cause prices to rise faster than incomes, meaning affordability remains a major headwind for buyers," he added.

What are they saying? "With rates expected to remain below 7 percent for the foreseeable future, [the Mortgage Bankers' Association] anticipates renewed activity in the housing market heading into the spring, especially if housing supply continues to rise," MBA's president and CEO Bob Broeksmit said in a statement.

-Aarthi Swaminathan

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01-11-24 1226ET

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