Mortgage rates decline this week


Mortgage rates slid this week to their lowest point since mid-December, offering some opportunistic buyers a small chance to save.

The average rate on the 30-year fixed mortgage fell to 6.33% from 6.48% the previous week, according to Freddie Mac. The decline came as investors anticipated government inflation data from December, which on Thursday showed consumer price growth had dropped to its lowest level in over a year.

For some buyers, the downturn in rates gives them a bit more bargaining power — as seller concessions become more commonplace and competition remains lower. For a few homeowners, the drop also offered a narrow refinance opportunity.

“Incentives have been realtors’ secret weapon to motivate buyers who are still very hesitant to buy or wait,” Adriana Perezchica, president of Via Real Estate Group, told Yahoo Finance. “Lots of misinformation and sensational news have confused everyone who is interested in purchasing a home. There are buyers who must move now, or the ones that identify the opportunity will be the only ones enjoying the benefits.”

Buyers have ‘the upper hand’

Buyers are finding more and more sellers trying to lure them in the old-fashioned way — through incentives — after higher mortgage rates shrunk demand.

A record 42% of homes sold in the final three months of 2022 included concessions from sellers, according to a recent Redfin report, up from just over 30% the previous quarter. Those concessions included mortgage rate buy-downs, cash for repairs, or closing costs and warranties for household appliances.

“Within the last three months, 100% of my clients [received incentives] for closing costs and prepaid expenses," Perezchica said. "Everyone has the option to get an inspection, no contingencies waived, and for the first time in 10 years, they have the upper hand negotiating terms.”

A sign announces
A sign announces "Outstanding Incentives" for buyers at the Windsor Square development in Buckingham, Pennsylvania. (Credit: William Thomas Cain/Getty Images)

Another selling strategy becoming more popular are price reductions. According to, 13.6% of homes on the market had a price cut last month, up from 7.1% the previous year.

"In December, the buyers I got under contract all received concessions to use for closing costs, prepay, or buy down their interest rate,” Perezchica said. “However, most of them would rather keep money in their pocket and use it for closing costs.”

That’s helping to take the sting out of prices.

The national median list price is still 8.4% higher than a year ago, and with elevated mortgage rates, the cost of financing 80% of the typical home is 58.9% higher versus a year ago. Still, the national median list price dropped to $400,000 in December, data from showed, continuing a steady decline from June’s record high of $449,000.

“We’re probably going to see home prices stabilize in 2023,” Keith Gumbinger, vice president of, told Yahoo Finance, “or become more affordable in areas that were once very popular as most buyers can no longer afford [seller] expectations.”

Real estate agents arrive at a brokers tour showing a house for sale in San Rafael, California. (Credit: Justin Sullivan/Getty Images)
Real estate agents arrive at a brokers tour showing a house for sale in San Rafael, California. (Credit: Justin Sullivan/Getty Images)

Sliver of opportunity for owners

The recent drop in rates also prompted a rise in refinance applications, the latest Mortgage Bankers Association (MBA) data found. The share of refinance applications increased 5% last week.

“The mortgage market began 2023 on a positive note, with a decline in mortgage rates leading to an uptick in refinance applications,” MBA President and CEO Bob Broeksmit said in an emailed statement.

Still, refinances remain 86% lower than a year ago, and only a small pool of homeowners can take advantage of current rates to lower their monthly payment. Just 760,000 homeowners could shave three-quarters of a point from their current mortgage, according to mortgage technology and data provider Black Knight, with only 272,000 high-quality candidates left.

"The population that can benefit in that regard remains historically very low and is comprised of mortgages a decade or more into repayment held by borrowers who have had ample opportunity to refinance under significantly better rates in recent years," Andy Walden, vice president of Black Knight's enterprise research and strategy, told Yahoo Finance.

Most refinances these days are homeowners tapping the wealth built up in their homes, Walden added.

"Rates are getting better, slowly," Jason Sharon, owner of Home Loans Inc., told Yahoo Finance. "Couple that with record levels of home equity and large consumer debt, we are seeing HELOCs and cash-out refis to save money on a monthly basis."

Gabriella is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.

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Originally published