The 30-year, fixed-rate mortgage declined this week for the second straight week, Freddie Mac said Thursday.
According to its Primary Mortgage Market Survey (PMMS), the average for the 30-year fixed-rate mortgage (FRM) dipped 2 basis points to 6.69%. A year ago, the rate averaged 5.78%.
“Mortgage rates decreased slightly this week in anticipation of the pause in rate hikes by the Federal Reserve," said Sam Khater, Freddie Mac’s chief economist. “As inflation continues to decelerate, economic growth is slowing and the tightening cycle of monetary policy is reaching its apex, which means mortgage rates are expected to decrease later this year and into next.”
While the 30-year rate fell, the 15-year rate rose 3 basis points to 6.1%. A year ago, it averaged 4.81%.
The PMMS is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit.
Hannah Jones, economic data analyst for Realtor.com, said that while slowing inflation is a sign of better economic conditions ahead, credit, especially for buying a home, is likely to remain expensive for the rest of the year.
“Incoming economic data will reveal whether enough has been done to bring inflation back down to the 2% target,” Jones said. "The interest rate hikes to-date are likely to take some time to move through the economy, and the Fed will adjust policy as they see fit in upcoming meetings.”
She noted that June’s updated Summary of Economic Projections from the Fed suggested that more rate hikes are possible by the end of the year, as the median end-of-year federal funds rate expectation increased half a point from March’s expectation.”
With both housing supply and demand stifled by affordability issues, mortgage rates have remained “on the high end of the 6%-7% range since the beginning of June, and home prices have made their typical seasonal ascent, though less aggressively than in summers past,” Jones said. “More than three-quarters of surveyed home shoppers expect to be priced out of the market if home prices and rates keep rising. However, prices are not expected to hit a new peak this summer as has been the trend in years past.”
Jones noted that the national median listing price fell year-over-year for the first time in the data’s history last week, as sellers adjusted their asking prices to attract buyers.
Despite this annual price decline, she said, homes in many areas are out of the feasible price range for many buyers and high interest rates are discouraging homeowners from giving up their current mortgage rate and listing their homes for sale.
“Though housing demand has softened nationally, many local markets, especially in affordable areas, continue to attract significant attention from home shoppers,” she said.
