Source: money.usnews.com

Mortgage rates edged lower this week, averaging 6.84% for the 30-year fixed loan term. Rates fell slightly across all types of fixed-rate mortgages, including FHA loans and VA loans. On the other hand, adjustable mortgage rates rose somewhat or stayed about the same week over week.

Here are the current average mortgage rates, without discount points unless otherwise noted, as of Dec. 1:

30-year fixed: 6.84% (down from 6.9% a week ago).
20-year fixed: 6.7% (down from 6.79% a week ago).
15-year fixed: 6.13% (down from 6.23% a week ago).
10-year fixed: 6.18% (down from 6.32% a week ago).
5/1 ARM: 5.46% (equivalent to 5.46% a week ago).
7/1 ARM: 5.61% (up from 5.59% a week ago).
10/1 ARM: 5.99% (up from 5.92% a week ago).
30-year jumbo loans: 6.85% (down from 6.91% a week ago).
30-year FHA loans: 6.04% with 0.06 point (down from 6.14% a week ago).
VA purchase loans: 6.11% with 0.05 point (down from 6.29% a week ago).

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"Mortgage rates continued to drop this week as optimism grows around the prospect that the Federal Reserve will slow its pace of rate hikes. Even as rates decrease and house prices soften, economic uncertainty continues to limit homebuyer demand as we enter the last month of the year."

– Sam Khater, Freddie Mac's chief economist, in a Dec. 1 statement

Amid signals that inflation has begun to retreat after peaking this summer, Federal Reserve policymakers are poised to soften their economic policy of aggressive rate hikes. Out of the six hikes the central bank implemented in 2022, the past four have increased the federal funds rate by 75 basis points.

Moderation – in the form of smaller rate hikes – could begin as soon as the Fed's next meeting on Dec. 13-14, Federal Reserve Chair Jerome Powell said in a Nov. 30 speech.

"Monetary policy affects the economy and inflation with uncertain lags, and the full effects of our rapid tightening so far are yet to be felt," Powell says. "Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down."

Mortgage lenders have already responded to Powell's bullish remarks, with the rate on a 30-year fixed mortgage falling further below 7% for the third consecutive week on Dec. 1. In the past month alone, mortgage rates have receded by about a half-point from the 7.33% peak. This gives prospective buyers the chance to jump back into the housing market at a time when home prices are also beginning to retreat.

But as Khater mentions, the current economic environment – in other words, the prospect of a recession in 2023 – has left many homebuyers with a sense of unease. On top of that, December is already a weak month for home sales activity from a seasonality prospective due in part to the holidays. Given these conditions, we can expect many silent nights in the real estate market as we trudge through the end of 2022.

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Source: money.usnews.com