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Mortgage rates fall for 4th consecutive week
The national average on the 30-year fixed-rate mortgage fell to 6.86% from 6.87% the previous week, according to Freddie Mac’s report published Thursday. Rates have fallen for four consecutive weeks and are at their lowest level since April.
The housing market has been sluggish—many home sellers have stayed put to maintain their favorable mortgage rates, while buyers facing affordability challenges have retreated from the market. However, both inventory and affordability could decline as rates are expected to fall for the remainder of the year.
“We’ll probably see rates slowly decline from here through the end of the year,” Joel Kan, deputy chief economist at the Mortgage Bankers Association, told Yahoo Finance. “And if our forecast is correct … that helps potential homebuyers.”
See more information: Mortgage Rates Today, June 27, 2024: The Mortgage Rate Seesaw Continues
Projected rate decline
The Mortgage Bankers Association is currently predicting that the Federal Reserve will cut its benchmark federal funds rate twice in 2024, bringing mortgage rates down to around 6.5% by the end of this year.
“I think the probabilities are still fluctuating, but that’s the base case,” Kan said, citing improving inflation data as the main factor for a possible interest rate cut. Annual inflation decreased in Maywith consumer prices rising 3.3% year on year.
Wells Fargo’s June economic summary predicted that mortgage rates would reach 6.5% by the end of the year, while Fannie Mae expects them to land at 6.7%.
A nearly 40 basis point decline in the mortgage rate, according to the MBA forecast, could “drastically change the math” for homebuyers, Kan said. This would help them qualify for a larger loan or reduce their monthly mortgage payment. Since the Fed began raising rates in 2022, many buyers have pulled out of the market as they wait for a more affordable environment.
At today’s average rate, a homebuyer would pay about $1,600 a month for a $300,000 home with a 20% down payment. according to Yahoo Finance’s mortgage calculator. Buyers would pay nearly $100 less per month if mortgage rates dropped to 6.5%.
Two people look at advertisements for houses for sale at a real estate agency. (Getty Images) (Europa Press News via Getty Images)
Demand for financing remained stable last week. The MBA Composite Market Index, which tracks weekly mortgage loan application volume, increased less than 1%. New mortgage application activity increased 1% but remained 13% lower than the same week last year. Refinancing activity remained the same.
“As we move forward, if we continue to see improvement in the inflationary picture,” Kan said, “[there is] more expectations that rates will fall.”
The story continues
See more information: Mortgage rates hover just below 7% – Is this a good time to buy a house?
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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