Mortgage rates finished the year twice as high as they started. In yesterday’s Freddie Mac Weekly Survey the 30 Year Fixed Rate Mortgage was at 6.42% and the 15 Year Fixed Rate Mortgage was at 5.68%. By comparison, in the first week of 2022 the 30 Year rate was 3.22% and the 15 year rate was 2.43%.
Freddie Mac’s Weekly Survey (see below) was released with its most recent assessment of the mortgage rate landscape. Freddie Mac now has a new methodology to it’s rate reporting, which started last month.
(dynamic chart with current data)
In other rate news, the Fed Funds Rate target was increased by 0.50% this month. The Fed recently said it will continue tapering its balance sheet, which is know as QT (quantitative tightening.) The plan is to reduce mortgages held by the Fed by $35 billion per month and US Treasury securities held by the Fed by $60 billion per month. In 2022, they did not stick to the Fed tapering plan. We will see if it is more of the same tepid approach in 2023.
The yield curve for treasury securities remains inverted with long term rates lower than short term rates. As seen below, these levels of inversion have not happened in a very long time and tend to be predictive of recessions.