Mortgage rates have dipped below 7% following promising inflation data and an update from the Federal Reserve, according to the latest figures from Freddie Mac.
For the week ending June 13, the 30-year fixed-rate mortgage averaged 6.95%, down from 6.99% the previous week, though higher than last year's 6.69%. The 15-year fixed-rate mortgage averaged 6.17%, also down from last week’s 6.29%, but slightly up from 6.10% a year ago.
As of Wednesday afternoon, Mortgage News Daily reported the current 30-year fixed-rate mortgage at 6.97% and the 15-year fixed-rate mortgage at 6.38%.
This marks the second consecutive week that mortgage rates have stayed below 7%, providing relief after nearly two months above this level. The recent decline follows new data indicating easing inflation, alongside the Fed's indication of at least one rate cut this year, which could further reduce mortgage rates.
Analysts and industry leaders predict this trend will continue. Greg McBride, chief financial analyst at Bankrate, stated, "Better inflation news from the Consumer Price Index and acknowledgment from the Fed of modest progress in inflation will help bring mortgage rates down."
Melissa Cohn, regional vice president of residential lender William Raveis Mortgage, added, "As the rate of inflation settles down, so will mortgage rates."
However, some experts remain cautious. Sam Khater, chief economist at Freddie Mac, pointed out, "Shelter inflation, which measures rent and homeownership costs, increased showing that housing affordability continues to be an ongoing impediment for buyers on the house hunt."
Consumer Activity Rises
Despite some uncertainties, consumers are responding to the falling mortgage rates. The Mortgage Bankers Association (MBA) reported a 15.6% increase in mortgage applications for the week ending June 7, with refinance applications jumping 28% and purchase applications rising 9%.
Bob Broeksmit, MBA’s president and CEO, commented, "It’s the first time the index has increased since May, a sign that borrowers are acting on lower rates."
Mike Fratantoni, MBA’s senior vice president and chief economist, highlighted that the rise in housing supply is also fueling application growth. "Multiple data sources are now indicating that home inventory levels, while still historically low, are up significantly from last year at this time," he noted. "This is good news for many prospective homebuyers who have been frustrated by the lack of homes on the market."
A report from Intercontinental Exchange indicated that nearly 90% of U.S. metropolitan areas had more homes for sale in April compared to the previous year. In some markets, inventory levels have even returned to pre-pandemic norms, providing opportunities for both buyers and sellers, though it may pose challenges for landlords and developers as more renters consider purchasing homes.