The 30-year fixed-rate mortgage (FRM) rose from last week’s average of 6.71% to an average of 6.81% 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 6.81% as of July 6, 2023, up from last week when it averaged 6.71%. A year ago at this time, the 30-year FRM averaged 5.3%.
- 15-year fixed-rate mortgage averaged 6.24%, up from last week when it averaged 6.06%. A year ago at this time, the 15-year FRM averaged 4.45%.
The takeaways:
“Mortgage rates continued their upward trajectory again this week, rising to the highest rate this year so far,” said Freddie Mac’s Chief Economist Sam Khater. “This upward trend is being driven by a resilient economy, persistent inflation and a more hawkish tone from the Federal Reserve. These high rates combined with low inventory continue to price many potential homebuyers out of the market.”
“The Freddie Mac fixed-rate for a 30-year mortgage ticked up by 0.1 percentage points to 6.81% this week, reaching the highest level since mid-November 2022 and mirroring the trend of 10-year treasury yields,” said realtor.com® Economist Jiayi Xu. “The latest core Personal Consumption Expenditure (PCE) Price Index, a crucial indicator monitored by the Federal Reserve for monetary policy decisions, suggests that inflation remains sticky. Although the headline PCE decreased from 4.3% in April to 3.8% in May, the core PCE, which excludes volatile food and energy prices, only retreated slightly on a year-over-year basis, down from 4.7% in April to 4.6% in May. Meanwhile, the newly released Fed’s minutes reaffirms officials’ determinations to bring the inflation back to the target 2% range. While this may put near-term upward pressure on interest rates, including mortgage rates, we anticipate a gradual decrease that could bring rates close to 6% by the end of the year.
“The 30-year fixed mortgage rates were over 6.6% for every week in June, creating a challenging summer market for both home sellers and buyers. For sellers, these high mortgage rates have been compelling existing homeowners to delay their selling and moving plans, despite the fact that home prices are still high and consumers generally agree that it’s a good time to sell. In fact, recent data indicated that nearly 82% of home shoppers reported feeling locked-in by their existing low-rate mortgage, while around one in seven homeowners without a selling plan cited their current low rate as their reason for remaining on the sidelines. As a result, the number of homes for sale remained lower than last year’s levels, with year-to-date new listings lagging 20% behind last year’s pace. In addition to the limited inventory for buyers, the rising interest rates also pose a significant concern for those intending to purchase a home within the next year. About 78% of home shoppers planning to buy in the near future anticipate being priced out of the market if both home prices and mortgage rates continue to rise.”
