Rates Flat At 6.78%

Mortgage rates ticked up just slightly last week, staying essentially the same after a weeks-long slide.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.78%, up 1 bps from the week prior’s 6.77%. A year ago at this time, the 30-year FRM averaged 6.81%.

The 15-year also rose to 6.07% from 6.05%. A year ago at this time, it was 6.11%.

“Mortgage rates essentially remained flat from last week but have decreased nearly half a percent from their peak earlier this year,” said Sam Khater, Freddie Mac’s Chief Economist. 

“Despite these lower rates, buyers continue to pause, as reflected in tumbling new and existing home sales data.”

Mortgage applications are down despite a 12 bps rate drop the week before last. Notably, refinances have gained steam as current homeowners have more to gain with rates descending than buyers, who face soaring listing prices.

New home sales slipped by 0.6% in June, throwing off analyst expectations and hitting a 7-month low.

Home prices are deterring buyers as much as rates right now. Actual sale prices are falling somewhat as inventory increases and buyers have more room to negotiate, but the actual impact on buyers depends on location.

Pandemic hotspots like Texas and Florida are seeing adjustments thanks to a combination of lenient construction laws leading to new inventory and fears over climate-related disasters deterring out-of-state immigration.

Tight markets in the Northeast, however, don’t have the room or capability to produce a new construction glut.

Overall, however, buyers should expect prices to keep moving up for the foreseeable future. Sellers who have to take on a higher interest rate to move are loathe to price adjust, and many would rather wait for a willing buyer to come along than negotiate.