Mortgage rates fall for the fourth consecutive week

The national average for 30-year fixed-rate mortgages fell to 6.86% from 6.87% a week earlier, according to a report from Freddie Mac released Thursday. Rates have fallen for four straight weeks and are at their lowest since April.

The housing market has been sluggish: many home sellers have stayed put to maintain their favorable mortgage rates, while buyers facing affordability issues have withdrawn from the market. However, inventory and affordability may improve as rates are expected to decline for the rest of the year.

“We’re probably going to see rates decline slowly through the end of the year,” Joel Kan, deputy chief economist at the Mortgage Bankers Association, told Yahoo Finance. “And if our predictions are correct…that helps potential buyers.”

Learn more: Mortgage Rates Today, June 27, 2024: Mortgage Rate Seesaw Continues

The Mortgage Bankers Association currently projects that the Federal Reserve will cut its benchmark federal funds rate twice in 2024, lowering mortgage rates to around 6.5% by the end of this year.

“I think the odds are still fluctuating, but that’s the base case,” Kan said, citing improving inflation data as the main driver of the potential interest rate cut. Annual inflation eased in May, with consumer prices rising 3.3% year-on-year.

Wells Fargo’s June economic summary predicted mortgage rates would reach 6.5% by the end of the year, while Fannie Mae expects them to land at 6.7%.

A drop in mortgage rates of nearly 40 basis points, according to the MBA forecast, could be a “drastic game changer” for homebuyers, Kan said. This would help them qualify for a larger loan or lower their monthly mortgage payments. Since the Fed began raising rates in 2022, many buyers have withdrawn from the market while waiting for a more affordable environment.

At current average rates, a buyer would pay about $1,600 per 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%.

Mortgage rates fall for the fourth consecutive weekMortgage rates fall for the fourth consecutive week

Two people look at listings 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 Market Composite Index, which tracks weekly mortgage application volume, rose 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 an improvement in the inflationary situation,” Kan said, “expectations of a rate cut will be higher. »

Learn more: Mortgage rates are just below 7% Is it a good time to buy a house?

Rebecca Chen is a reporter for Yahoo Finance and previously worked as a Certified Investment Tax Accountant (CPA).

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