Thirty-year fixed-rate mortgages continued to decline, dropping another 1 basis point this week to their lowest level since early April, according to Freddie Mac.
The average rate was 6.86% as of June 27, down from 6.87% a week earlier but up from 6.71% at the same time a year ago, according to the Primary Mortgage Market Survey. The last time rates were lower was on April 4.
This diverges from the weekly movement of 15-year fixed-rate loans, which averaged 6.16% on those loans, up from 6.13% last week. During the same period a year ago, this product averaged 6.06%.
“30-year fixed-rate mortgages continue to trend downward, reaching their lowest level in nearly three months,” Freddie Mac chief economist Sam Carter said in a press release. “Historically, with the economy performing well, we expect interest rates to continue to fall through the summer as homebuyers return to the market.”
Movements in interest rates tracked by Freddie Mac have mirrored movements in the 10-year Treasury yield for at least much of the past week.
The 10-year Treasury note had remained in a narrow range for most of the past seven days but rose 8 basis points from the previous day's close to 4.32% on June 26, its highest level since June 11.
However, in early trading on Thursday it was down to 4.29%.
That hasn't yet been reflected in mortgage prices: As of 11:45 a.m., Zillow's interest rate tracker was at 6.66%, up 3 basis points from the previous day and 12 basis points from the previous week's average.
At 10:20 a.m. Thursday, the rate on a 30-year fixed-rate mortgage from the National Mortgage News website's Lending Pricing Product and Pricing Engine rose above 7 percent to 7.021 percent, and at 11:45 a.m. it was 6.995 percent. But that was still nearly 14 basis points higher than the 6.86 percent a week earlier.
Orfe Dibongai, senior economist at Zillow Home Loans, said while interest rates are rising, they have remained relatively flat through June and are still significantly lower than they were this spring.
“Recent economic data suggests that economic growth may be slowing and inflation may return to the Fed's 2 percent target sooner than previously expected,” Divengy said in a statement Wednesday night. “Slowing consumer spending, declining home sales and rising residential vacancy rates suggest that aggregate demand will weaken in the coming months, easing price pressures.”
Odeta Kusi, deputy chief economist at First American Financial, said in a release released Thursday morning that home sales expectations fell 2.1% in May from the previous month, but that interest rate movements in June have improved the outlook somewhat.
“Continued declines in mortgage rates and rising inventory levels may tempt some buyers into a strong summer homebuying season,” Kushi said in a statement. “However, a strong summer recovery is unlikely given ongoing homebuying constraints.”
According to the Mortgage Bankers Association's Weekly Survey of Applications released yesterday, the 30-year conforming fixed-rate mortgage rate fell 1 basis point to 6.93%.
“Housing inventory is on the rise, albeit from very low bases, and mortgage rates are currently below 7 percent,” MBA President and CEO Bob Broeksmit said in a statement Thursday morning. “This is good news for prospective buyers, especially those with children, who are looking to move before the new school year begins.”
The release of the personal consumption expenditures index on June 28 will be the next key milestone that could influence interest rate movements as investors use the data to adjust their inflation expectations.
“Core inflation is expected to ease further over the past month,” Divenghy said. But a higher-than-expected inflation reading could reverse progress and push up interest rates.
