Mortgage rates took a major tumble last week. It was their biggest decline since 1981, continuing today’s housing market roller coaster ride.

The 30-year fixed-rate mortgage averaged 6.61% in the week ending November 17. That’s down from 7.08% the week before, according to Freddie Mac’s Primary Mortgage Market Survey.

A year ago, the 30-year fixed rate was 3.10%.

“Mortgage rates tumbled this week due to incoming data that suggests inflation may have peaked,” said Sam Khater, Freddie Mac’s chief economist.

The GSE’s PMMS no longer surveys lenders for its data. Instead, results are based on thousands of applications submitted to Freddie Mac from lenders nationwide when a borrower applies for a mortgage. 

“While the decline in mortgage rates is welcome news, there is still a long road ahead for the housing market,” Khater said. “Inflation remains elevated, the Federal Reserve is likely to keep interest rates high and consumers will continue to feel the impact.”

But that doesn’t mean it will be smooth sailing from here on out. George Ratiu, manager of economic research at Realtor.com, told Yahoo Finance that the mortgage market isn’t “out of the woods yet” given the Federal Reserve’s commitment to increasing rates over the next few months.

“We may still see rates rebound back above 7% before the end of the year,” Ratiu said.

As for 2023, the trend to watch is whether mortgage rates will go any higher, and if so, by how much, said Mark Fleming, chief economist at First American.

“Once mortgage rates peak, housing market potential will likely stabilize,” Fleming said. “The housing market, once adjusted to the new normal of higher mortgage rates, will benefit from continued strong demographic-driven demand relative to an overall, long-run shortage of supply. Based on current dynamics, it appears the housing market may begin to stabilize in 2023.”

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