Santa Monica Monthly – December 2024

Borrowing costs have reached their lowest point in over a month.

The average rate for a 30-year fixed mortgage dropped to 6.69% this week, down from 6.81% the week before, according to Freddie Mac’s Thursday report. This marks the lowest average in more than a month and has spurred a noticeable rise in mortgage application activity, a key indicator of homebuying interest.

The slight decline in rates may be boosting buyers' purchasing power. “Rates in the mid-6% range are more appealing than the nearly 7% we saw in November,” says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. At this week’s average, a buyer purchasing a $400,000 home with a 20% down payment would have a monthly mortgage payment of roughly $2,063. With a 10% down payment, that payment would rise to about $2,321, Lautz explains.

Sam Khater, chief economist at Freddie Mac, notes, “The responsiveness of prospective home buyers to even small changes in rates illustrates that affordability headwinds persist” in today’s housing market. The Mortgage Bankers Association reported a 6% increase in purchase applications last week, the highest level recorded since January.