As of January 10, 2025, the mortgage landscape has experienced notable shifts:
  • 30-Year Fixed Rate Mortgage (FRM): The average rate has risen to 6.93%, reflecting an increase in borrowing costs for long-term homebuyers.
  • 15-Year FRM: This shorter-term option stands at 6.14%, offering a slightly lower rate for those opting for a quicker payoff period.
  • Adjustable Rate Mortgages (ARMs): The average monthly rate has climbed to 6.55%, following a brief spike to 6.88% in late December. Notably, the ARM rate now surpasses the 15-year FRM rate, diminishing its traditional appeal to buyers seeking increased borrowing capacity.
These rate increases are influenced by the performance of the 10-year Treasury Note, which has reached 4.76%. The current spread between the 10-year Treasury Note and the 30-year FRM rate is 2.17%, exceeding the historical risk premium spread of 1.5%. This suggests that lenders are adjusting their risk assessments, potentially to stimulate mortgage originations amid changing economic conditions. For potential homebuyers and investors, these developments indicate a tightening in the housing market, with higher borrowing costs potentially impacting purchasing decisions and overall market activity.
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