The 30-year fixed mortgage rate decreased for the third straight week, while remaining within 10 basis points of its highest point since last November, Freddie Mac said Thursday.
The government-sponsored enterprise released the results of its Primary Mortgage Market Survey (PMMS), showing the 30-year fixed-rate mortgage (FRM) averaged 6.67% as of June 22. That was down just 2 basis points from last week’s average of 6.69%, and down from its high this year of 6.79%, set June 1.
A year ago at this time, the 30-year fixed mortgage averaged 5.81%.
The 15-year fixed-rate mortgage also fell, averaging 6.03% this week. That was down from 6.1% last week, but up from 4.92% a year earlier.
Freddie Mac’s PMMS is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit.
“Mortgage rates slid down again this week but remain elevated compared to this time last year,” said Freddie Mac Chief Economist Sam Khater. “Potential homebuyers have been watching rates closely and are waiting to come off the sidelines. However, inventory challenges persist as the number of existing homes for sale remains very low. Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.”
George Ratiu, chief economist at Keeping Current Matters, said the slide in mortgage rates occurred as the 10-year Treasury has been “moving up and down over the past week and a half, as investors focused their attention on the next six months, anticipating further monetary tightening.”
He noted that Federal Reserve Chairman Jerome Powell confirmed expectations of additional rate hikes in this week’s testimony to Congress. Powell said the central bank is “overachieving” on its mandate to keep employment stable, but also remarked that the economy remains in expansion mode, which is likely to keep inflation running higher for a longer period.
Powell also said that a majority of FOMC members “expect that it will be appropriate to raise interest rates somewhat further by the end of the year.”
“The Fed has been clear about its unwavering commitment to subduing inflation, and this week’s remarks indicate that we may see another couple of rate hikes this year,” Ratiu said.
He also noted that new data this week point to a rebound in housing activity, with a jump in new construction spotlighting growing homebuilder confidence. “Construction companies are responding to the fact that Americans continue to shop for homes amid the new normal of higher mortgage rates,” Ratiu said. “And with the supply of existing homes still below pre-pandemic levels, new houses offer many buyers a path toward homeownership.”
Ratiu added that there are signs that this summer’s housing market will normalize, in the wake of what he calls “unicorn years” for the market.
“The unique real estate circumstances of the 2020-22 period — government-mandated quarantines, remote work, massive fiscal and monetary easing — could be better characterized as ‘unicorn years,’ not easily repeatable,” he said. “Any comparisons to those years may cast a shadow over the current market. At the same time, a return toward historical trends is a welcome move in the right direction.”
