Mortgage rates have fallen below 7% following encouraging news on inflation and an update from the Federal Reserve, according to the latest data from Freddie Mac.
of 30-Year Fixed Rate Mortgage The mortgage finance giant said Thursday that mortgage rates averaged 6.95% for the week ending June 13, down from 6.99% the previous week but higher than 6.69% for the same period last year. Rates on 15-year fixed-rate mortgages averaged 6.17%, lower than 6.29% the previous week but slightly higher than 6.10% a year ago.
As of Wednesday afternoon, the current 30-year fixed rate mortgage also dropped to 6.97%. The current 15-year fixed rate mortgage was at 6.38%. Mortgage News Daily.
This marks the second consecutive week that rates have averaged below 7%, a welcome respite after nearly two months above that level. The easing in rates comes on the heels of new data pointing to easing inflation. The Fed has also signaled its intention to cut the federal funds rate at least once this year, a move that should put downward pressure on mortgage rates.
Some analysts and executives expect the downward trend in mortgage rates to continue after these updates. Weekly Survey From personal finance website Bankrate.
“News of improving inflation from the CPI, along with the Fed’s recognition of modest improvement in inflation, should encourage lower mortgage rates,” said Greg McBride, the website’s chief financial analyst.
“As inflation settles down, mortgage rates will likely settle down,” added Melissa Cohn, regional vice president at mortgage lender William LaVais Mortgage.
But other industry experts remain cautious, noting that while top-line inflation is declining, housing inflation remains high and is trending upwards.
“Housing inflation, which measures the cost of rent and homeownership, is rising, suggesting that affordability continues to pose a barrier for homebuyers searching for a home,” Freddie Mac chief economist Sam Carter said in a statement.
Despite this uncertainty, consumers are already benefiting from easing mortgage rates.
Mortgage applications increased a seasonally adjusted 15.6% in the week ended June 7 compared to the previous week, according to the latest data from the Mortgage Bankers Association Market Composite Index, a measure of mortgage application activity. It was released on Wednesday. Refinance applications surged 28% compared to the previous week, while purchase applications increased 9%.
Bob Broeksmit, president and CEO of the industry group, said in a statement that this was the first time the index had increased since May, indicating borrowers are acting in response to low interest rates.
An increase in housing supply is also contributing to the increase in applications, said Mike Fratantoni, senior vice president and chief economist for the trade group. Combined with lower mortgage rates, the change is good news for buyers.
“Multiple data sources indicate that housing inventory levels, while still historically low, are significantly higher than this time last year,” he said. “This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market.”
June 3 report For example, about 90% of U.S. metropolitan areas had more homes for sale in April than they did at the same time in 2023, according to research from mortgage data provider Intercontinental Exchange. It also found that in some markets, inventory of homes for sale is returning to pre-pandemic levels. That’s good news for buyers and sellers, but could have a negative impact on landlords and developers as more renters now have the option to enter the market as buyers.
