Mortgage rates surge in the final weeks of 2024

Mortgage rates headed upward over the Christmas holiday week, running counter to Federal Reserve policy that might suggest movement in the opposite direction.

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The 30-year fixed-rate mortgage came in at an average of 6.85% for the seven-day period ending Dec. 26, according to Freddie Mac’s weekly Primary Mortgage Market Survey. Economic trends provided lift, as the latest number rose 13 basis points from a 6.72% average a week earlier. This week’s mean is also higher from one year ago when the 30-year rate finished at 6.61% in 2023’s final survey.

Meanwhile, the 15-year fixed rate average landed precisely at 6% to end 2024, climbed up 8 basis points from 5.92% seven days prior. The average was also up from 5.93% compared to the same week a year ago.

“Mortgage rates increased for the second straight week, rebounding after a decline from earlier this month,” Freddie Mac Chief Economist Sam Khater said in a press release. 

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Rates jumped to counter the latest Federal Reserve move that might provide downward pressure. As expected, the Fed cut its benchmark rate 25 basis points, but the effect of the central bank’s reduction was already baked into markets prior to the Dec. 18 announcement, housing researchers previously noted. 

Views on the necessity of such a cut diverged, though, even among members of the Federal Open Market Committee, supporting the arguments of some investors regarding the wisdom of reducing rates in the current economic environment. 

Markets appeared to instead react to signals of a still-robust economy illustrated by consumer sentiment readings earlier this month and signs of spending leading up to the holidays. 

Yields of 10-year Treasurys, which influence the direction of mortgage rates, reflected the sentiment, increasing to 4.63% on Thursday morning compared to 4.57% at trading close one week earlier. 

Data released this week, though, indicate consumers see headwinds forming as they enter the new year and the beginning of a new presidential administration. 

While strong consumer spending might boost mortgage rates higher to buyers’ disappointment, Khater also pointed to positive outcomes for housing supply if latest trends hold. 

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“The market remains plagued by an overwhelming undersupply of homes,” he said. “A strong economy can help build momentum heading into the new year and potentially boost purchase activity.”

Earlier this month, Freddie Mac forecasted a slight and gradual decline of mortgage rates throughout 2025, which would also contribute to increased sales volumes. 

Similar year-end signs of emerging growth were noted by other housing researchers, including  Mark Fleming, chief economist at First American in its monthly Home Price Index. 

“As the housing market adjusts to the new normal of higher mortgage rates, buyers and sellers are gradually returning, supported by a healthy labor market and more homes for sale compared to last year,” he said.

Other mortgage rate trackers registered similar upward movement alongside Treasury yields and Freddie Mac over the past seven days. Lender Price reported a 30-year fixed average of 7.24% as of midday Thursday, according to its data on National Mortgage News’ website. The rate was up from 7.12% a week earlier.

Zillow’s rate tracker showed a larger 15 basis point jump from the pre-Christmas week based on offers coming through its platform. The 30-year fixed average stood at 6.72% Thursday morning compared to a mean of 6.57% last week.