The 30-year fixed-rate mortgage (FRM) continued to decrease this week, from last week’s average of 6.89% to an average of 6.77% this week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers:
- The 30-year FRM averaged 6.77% as of July 18, 2024, down from last week when it averaged 6.89%. A year ago at this time, the 30-year FRM averaged 6.78%.
- The 15-year FRM averaged 6.05%, down from last week when it averaged 6.17%. A year ago at this time, the 15-year FRM averaged 6.06%.
The takeaways:
“The 30-year fixed-rate mortgage fell to its lowest level since mid-March, dropping 12 basis points from last week,” said Sam Khater, Freddie Mac’s chief economist. “Mortgage rates are headed in the right direction and the economy remains resilient, two positive incremental signs for the housing market. However, homebuyers have yet to respond to lower rates, as purchase application demand is still roughly 5% below Spring, when rates were approximately the same. This is not uncommon: sometimes as rates decline, demand weakens, and the apparent paradox is driven by buyers making sure rates don’t decline further before they decide to purchase.”
Realtor.com Economist Jiayi Xu commented:
“The Freddie Mac rate for a 30-year mortgage dropped 12 basis points to 6.77% this week as 10-year Treasury yields remained below 4.2%. In a recent talk, Powell mentioned that the central bank won’t wait for inflation to hit 2% before cutting interest rates due to the policy’s long lag effect. Instead, they are seeking greater confidence that inflation will return to the target before initiating rate cuts. Fortunately, June’s more moderate jobs report and cooling CPI were solid readings that should help the Fed gain more confidence that the economy is moving in the right direction and could raise hopes for a rate cut signal in the July FOMC statement. This development should help interest rates, including mortgage rates, continue on a downward trend, especially if the economy keeps making progress.
“Although mortgage rate relief has not arrived as quickly as many expected, the recent downward trend is encouraging news for homebuyers who have been hindered by high rates. In addition, the increase in affordable inventory brings hope to first-time homebuyers who lack substantial home equity to leverage. Nevertheless, similar-sized homes are still more expensive than a year ago, with the listing price per square foot increasing by 3.4% in June compared to last year. Looking ahead, we expect the rising inventory to gradually exert downward pressure on price growth and falling mortgage rates to help lower borrowing costs, providing more relief to potential homebuyers.”
