MCLEAN, Va. - Freddie Mac (OTCQB: FMCC (OTC:FMCC)) reported today that the 30-year fixed-rate mortgage (FRM) has risen to an average of 6.32 percent. This notable increase follows the recent release of a robust September jobs report and marks the largest one-week surge in mortgage rates since April.
The 30-year FRM, a common benchmark in the United States for mortgage rates, experienced a jump from the previous week's average of 6.12 percent. In a historical context, the current rate shows a decrease from the same period last year when the average was 7.57 percent. The 15-year fixed-rate mortgage also saw an uptick to an average of 5.41 percent, climbing from 5.25 percent the week before and down from 6.89 percent a year ago.
According to Sam Khater, Freddie Mac’s Chief Economist, the increase in mortgage rates can be attributed to changes in market expectations rather than a reflection of the fundamental economic conditions, which he described as having been strong for most of the year.
Despite the challenges that higher rates pose for affordability, Khater suggests that the economic strength demonstrated could continue to support the recovery of the housing market. The survey, focused on conventional, conforming, fully amortizing home purchase loans for borrowers with excellent credit and a 20 percent down payment, serves as a key indicator of mortgage market trends.
Freddie Mac, a public government-sponsored enterprise, plays a significant role in the housing finance system by purchasing mortgages and packaging them into securities, thereby ensuring liquidity and stability in the housing market. The organization has been instrumental in facilitating homeownership for millions of families since its inception in 1970.
The latest figures from Freddie Mac's Primary Mortgage Market Survey® highlight the dynamic nature of the housing market and provide crucial information for potential homebuyers and the real estate industry. The data underscores the sensitivity of mortgage rates to broader economic indicators and the importance of market expectations in shaping these rates.
This report is based on a press release statement issued by Freddie Mac on October 10, 2024.
In other recent news, Freddie Mac has reported notable developments in the U.S. mortgage market. The 30-year fixed-rate mortgage has seen a series of fluctuations, reaching its lowest point since May 2023 at 6.08%. This trend, according to Freddie Mac's Chief Economist, is anticipated to continue through the end of the year. However, despite the decline in mortgage rates, potential homebuyer interest has not significantly increased.
The 15-year fixed-rate mortgage also experienced changes, with a slight increase to 5.16% from 5.15% in the previous week. In contrast, the same rate last year was significantly higher at 6.72%. Despite these changes, affordability issues remain a significant concern for homebuyers, as stated by Freddie Mac's chief economist.
The National Association of Realtors reported a 1.3% rise in existing home sales in July, ending a four-month streak of declines. However, the pace of home sales remains sluggish, according to Lawrence Yun, NAR's chief economist. These are recent developments that potential investors should take into consideration.
InvestingPro Insights
As Freddie Mac (OTCQB: FMCC) reports on the rising mortgage rates, it's worth examining the company's financial health and market position. According to InvestingPro data, Freddie Mac's market capitalization stands at $3.61 billion, reflecting its significant presence in the financial services sector.
Despite the challenges posed by rising mortgage rates, InvestingPro Tips indicate that Freddie Mac's net income is expected to grow this year. This projection aligns with the company's role in facilitating liquidity in the housing market, which could benefit from the economic strength mentioned by Chief Economist Sam Khater.
Interestingly, while Freddie Mac has not been profitable over the last twelve months, analysts predict the company will return to profitability this year. This forecast suggests potential resilience in Freddie Mac's business model, even in a fluctuating interest rate environment.
The company's revenue for the last twelve months as of Q2 2023 was $22.96 billion, with a remarkable revenue growth of 27.92% over the same period. This strong performance underscores Freddie Mac's ability to generate income despite market volatilities.
It's worth noting that Freddie Mac's stock has shown high returns over the last year, with a one-year price total return of 88.68% as of the latest data. This impressive performance may reflect investor confidence in the company's ability to navigate the changing mortgage landscape.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and insights on Freddie Mac. In fact, there are 7 more InvestingPro Tips available for FMCC, providing a deeper understanding of the company's financial position and market outlook.
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