This past week, mortgage rates remained relatively stable, hovering around 7%. The average rate for a 30-year fixed-rate mortgage saw a slight dip of just one basis point to 6.94% for the week ending June 12, as reported by Zillow to BW. With the Federal Reserve meeting scheduled to conclude on June 18, investors are not anticipating any changes to the federal funds rate, which is likely to keep mortgage rates steady as well.
Looking ahead, the outlook for mortgage rates suggests a relatively stable summer, but there may be a chance for lower rates in the fall.
Positive Inflation Trends for Borrowers
Recent Consumer Price Index data revealed that inflation did not accelerate as much as expected, with a modest 0.1% increase last month compared to the projected 0.2%. Year-over-year inflation rates also fell slightly below expectations, rising 2.4% instead of the anticipated 2.5%.
These inflation trends could benefit mortgage borrowers, as declining inflation numbers may prompt the Federal Reserve to consider a rate cut in the future. However, uncertainties such as tariffs could impact U.S. inflation rates, influencing the Fed’s decision-making process.
While a rate cut may not happen until September at the earliest, cooling inflation throughout the summer could pave the way for potential rate reductions, offering relief to homebuyers.
Scott Anderson, Chief U.S. Economist at BMO Capital Markets, highlighted the impact of inflation trends on the Fed’s decision-making process, emphasizing the need for continued monitoring of economic indicators.
As we move into the summer months, watching inflation data closely will be crucial in assessing the likelihood of a rate cut in the near future, potentially influencing mortgage rates for prospective homebuyers.
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Increase in Mortgage Applications
Recent data from the Mortgage Bankers Association (MBA) indicates a rise in mortgage applications to their highest level in over a month. Purchase applications saw a 10% increase on a seasonally adjusted basis and a 20% rise on both a week-over-week and year-over-year basis.
Homebuyers who secured conventional mortgage contracts last week did so at an average interest rate of 6.93%. Despite the modest decrease, the stable rate environment coupled with an expanding inventory of homes could motivate more buyers to enter the market.
Joel Kan, Vice President and Deputy Chief Economist at the MBA, noted the increase in homebuyer activity amid improving housing inventory conditions, suggesting a positive outlook for the real estate market.
Considering the current rate environment, potential homebuyers should assess their affordability and explore refinancing options for potential rate reductions in the future. As competition in the housing market intensifies, staying informed about market trends is essential for making informed decisions.