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Mortgage Rates Hover Just Under 7% | Freddie Mac
By Leslie Cook MONEY RESEARCH COLLECTIVE
According to Freddie Mac’s benchmark survey, the average rate on a 30-year fixed-rate mortgage has increased to 6.96%.
Mortgage rates are piggybacking on last week’s big jump, and just set a new 2023 high.
According to Freddie Mac, the average rate on a 30-year mortgage, the most common type of loan among U.S. homebuyers, increased to 6.96%, a change of 0.15 percentage points over the past week. The last time the 30-year rate was close to 7% was in November.
The rate on a 15-year fixed-rate loan also increased and is now averaging 6.30% — 0.06 percentage points higher.
Mortgage rates continue to rise
Mortgage rates jumped higher this past week despite new signs that inflation is cooling.
On Wednesday, the Consumer Price Index showed that inflation fell more in June than experts anticipated. Prices increased by just 0.2% month-over-month and by 3% year-over-year, the lowest level in more than two years.
Core inflation, which excludes food and energy prices, was 4.8% higher compared to a year ago, still well above the Federal Reserve’s target range of 2%.
The labor market is also, at long last, showing signs of a slowdown. On Friday, the Department of Labor reported the economy added 209,000 jobs last month, below analyst estimates. It was also the slowest pace of job creation since December 2020.
How this economic news impacts the Fed’s upcoming decision on whether or not to resume increases to the federal funds rate is uncertain. Some analysts predict it could be enough of an improvement for the central bank to extend the “pause” it implemented in May, which would allow interest rates to stabilize.
Most analysts, however, expect the Fed to announce another 0.25 percentage point rate increase at the end if it July meeting in two weeks time, which means mortgage rates could still move higher.
“Despite the improvement in a key inflation measure in June, stronger than expected economic data and still high core inflation suggest the decline in bond yields and mortgage rates could be short-lived,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement.
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Leslie Cook is the Lead Mortgage Reporter covering mortgages and the housing market for Money. She has been a guest on the This Morning with Gordon Deal radio show and served as moderator for ServiceLink's State of Homebuying webinar. Her career started as a business reporter over 30 years ago, covering the computer and human resources beats for Caribbean Business newspaper in San Juan, Puerto Rico. She graduated Cum Laude from Bryn Mawr College in Pennsylvania with a bacheloru2019s degree in history.