House with arrow going slightly down with percentage sign
Illustration by Lanette Behiry/Real Estate News

Mortgage rates dip as inflation slows 

Following a two-week uptick, the 30-year mortgage rate dropped this week, averaging 6.33% on Jan. 12, down from 6.48% the week before.

January 12, 2023
3 minutes

Key points:

  • The mortgage rate decline comes on the heels of new inflation data. Inflation slowed in December, checking in at 6.5%.
  • Economists expect the rate to bounce around the 6-7% range in the short term, creating a "new normal" for buyers.

After rising for two consecutive weeks, mortgage interest rates have once again begun to dip, and the latest data on inflation could mean more declines are on the horizon.

Freddie Mac reported the average 30-year-fixed-rate mortgage was 6.33% on Jan. 12, down from 6.48% the week before.

Freddie Mac's Chief Economist Sam Khater noted that the market remains hypersensitive to rate movements, and to expect large swings in the number of mortgage applications depending on the current rate.

"Over the last few weeks latent demand has been on display with buyers jumping in and out of the market as rates move," Khater said.

Those looking for good news when it comes to mortgage rates may find it in the latest consumer price index numbers from the U.S. Bureau of Labor Statistics, also released today. 

While inflation is still high at 6.5% year-over-year, it continues to show a downward trend. The latest report probably won't deter the Federal Reserve from more interest rate hikes in the short term, but if this trend continues, they might stop by the middle of the year, said Lisa Sturtevant, chief economist for Bright MLS.

"With less pressure on the Federal Reserve, mortgage rates have likely hit their peak for the cycle and will now start to come down slowly," Sturtevant said. "Both buyers and sellers will begin to accept the 'new normal' of the 2023 housing market — which includes mortgage rates around 6% — and we should see more activity from both buyers and sellers as we head into the spring."

While inflation is still hurting consumers at this stage, it's trending in a direction that could lead to mortgage rates falling below 6%, said Lawrence Yun, chief economist at the National Association of Realtors.

"The gate is beginning to open for homebuyers who got shut out in October and November when the rates were above 7%," Yun said. "However, there is still a housing shortage and not enough listings."

George Ratiu,'s manager of economic research, expects interest rates to bounce around the 6-7% range in the short term. That will probably mean buyers will aggressively shop around for the best mortgage rates.

"This is especially important considering that at today's rate, the monthly payment for a median-priced home is $1,990, not including taxes and insurance, a 51% increase from last January," Ratiu said.

Also declining was the 15-year fix-rate mortgage, according to Freddie Mac. The rate was 5.52% on Jan. 12, down from 5.73%. A year ago, the 15-year rate averaged 2.62%.

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