Rates Trend Down For Another Week

Mortgage rates inched down last week, reaching their lowest level in nearly three months.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.86%, down slightly from the week prior’s 6.87%. A year ago at this time, the 30-year FRM averaged 6.71%.

The 15-year, however, rose to 6.16% from 6.13%. A year ago at this time, it was 6.06%.

“By historical standards, the economy is in good shape, and we expect rates to continue to come down over the summer months, bringing additional homebuyers back into the market,” said Sam Khater, Freddie Mac’s Chief Economist.

The next question is how quickly buyers will respond to cooling rates. Mortgage applications barely moved last week despite rates trending down. 

Joel Kan, MBA’s Vice President and Deputy Chief Economist, noted that small rate changes aren’t enough to entice many buyers, especially current homeowners locked in super-low from the pandemic era. Americans, on the whole, are choosing to wait and see.

“The odds are good that rates will end 2024 lower than they are now,” Keith Gumbinger, vice president of mortgage site, HSH.com, told CNET.

But predicting exactly how much lower is impossible. Homeowners saddled with rates above 7% from purchases last year may have better luck watching daily rates and settling for something in the mid-6%s.

Plus, rates are not the only thing buyers must consider. Soaring home prices impact how much they can save for a down payment and how big their monthly payments are.

Analysts say prices should decrease as inventory continues to correct in the coming months.

Some price adjustments are already underway. The typical U.S. home sold for under asking price in the last four weeks, the first time that’s happened since the onset of the pandemic. Almost 7% of sellers dropped their asking price in the same period. Though most sellers are still making a profit, the trend reflects a changing landscape in the housing market.

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