After three weeks of hikes, mortgage rates did an about-face this week. According to the latest Primary Mortgage Market Survey (PMMS) from Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 6.71% this week, down from 6.79% the previous week.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.71% as of June 8, 2023, down from last week when it averaged 6.79%. A year ago at this time, the 30-year FRM averaged 5.23%.
- 15-year fixed-rate mortgage averaged 6.07%, down from last week when it averaged 6.18%. A year ago at this time, the 15-year FRM averaged 4.38%.
What the experts are saying:
“Mortgage rates decreased after a three-week climb,” said Sam Khater, Freddie Mac’s chief economist. “While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective homebuyers.”
Realtor.com Economist, Jiayi Xu, commented:
“The Freddie Mac fixed rate for a 30-year mortgage dropped by 0.08 percentage points to 6.71% this week. Meanwhile, the 10 year treasury bond yield, which serves as an economic benchmark, dipped this morning after jobless claims in early June jumped to their highest level since October 2021. However, May’s jobs report seems to tell a more complicated story with higher than expected net new jobs added to the market, indicating stronger employment activities, despite the simultaneous rise in unemployment in May. The mixed signals in the labor market reveal the complexities involved in interpreting economic data and introducing uncertainties in the upcoming Federal Reserve policy decisions. Last week, the Federal Reserve officials discussed skipping a rate hike in June, enabling the Fed to gather more data before making any decisions.
“By framing the discussion in terms of “skipping” rather than “pausing,” policymakers are indicating that the current interest rate may not have reached its peak for this particular economic cycle. While the potential for another rate hike raises the prospect of increased mortgage rates, the objective of curbing inflation will ultimately lead to a decline in mortgage rates, bringing much-desired stability to the market.
“Despite stalling list prices, homebuyers continue to face higher monthly mortgage payments compared to one year ago. This persistent challenge is primarily attributed to elevated mortgage rates, making it more difficult for buyers to afford a typical home. According to a new survey by Realtor.com and Censuswide, the most common mortgage rate comfort-level cited for potential buyers constrained by financial factors was in the 3.0%-3.25% range, less than half of today’s level. Even for individuals with plans to purchase within the next year, almost 80% of them expressed concerns about being priced out of the market if housing prices and mortgage rates continue to rise. Consequently, affordability will play a crucial role in helping them achieve their goal of purchasing a home. Relator.com’s cross-market report showed that home shoppers from the expensive West and Northeast showed stronger interest in searching for affordability than a year ago. However, due to a limited number of markets that are considered more affordable options, buyers from the cheaper Midwest were more likely to be forced to compete in more expensive markets, thereby intensifying the challenges to get access to homeownership.”