After three weeks of declines, the 30-year fixed-rate mortgage (FRM) moved up modestly from last week’s average of 6.67% to an average of 6.71% this week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.71% as of June 29, 2023, up from last week when it averaged 6.67%. A year ago at this time, the 30-year FRM averaged 5.70%.
- 15-year fixed-rate mortgage averaged 6.06%, up from last week when it averaged 6.03%. A year ago at this time, the 15-year FRM averaged 4.83%.
What the experts are saying:
“Mortgage rates have hovered in the six to seven percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year,” said Sam Khater, Freddie Mac’s chief economist. “New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction. The improved demand has led to a firming of prices, which have now increased for several months in a row.”
Realtor.com economist Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year mortgage increased by 0.04 percentage points to 6.71% this week as investors assessed Powell’s latest comments on rate hikes. Two weeks ago, the FOMC signaled that the projected policy rate would be 50 basis points higher than previously expected by the end of 2023, which is also half a point higher than the current rate. Powell’s recent comments remarked that the very strong labor market is the main driver behind the Fed’s rate setting decisions and that there’s more restriction coming. While this may pose near-term upward pressure on interest rates, including for mortgage rates, we expect a gradual decline that could bring rates near 6.0% by year-end.
“In addition to still-high mortgage rates and housing prices, the shortage of housing supply has worsened the conditions faced by first-time home buyers, creating an especially challenging situation for those dreaming of homeownership. While smaller entry-level homes may not meet the criteria of a dream home, there is strong demand, but very few homes available that fit the bill. Thankfully, builders are taking note of the market need and are making efforts to catch up to demand through new construction, especially of homes at lower price tiers. After dropping below 10% in 2022, the proportion of new homes sold that are priced under $300,000 is on an upward trajectory. Early estimates in May indicate that homes within this price range constituted approximately 17% of total sales, marking the highest share since December 2021 (18%). Despite this encouraging news, there remains an urgent need for more homes at the most affordable price points, where the shortage of available inventory is most severe.”
