Interest rates for mortgages saw a slight increase in the week ending July 25, but they remain close to their lowest levels since spring.
The average rate for a 30-year fixed-rate mortgage was 6.69%, up two basis points from the previous week, as reported by Zillow to BW. A basis point represents one one-hundredth of a percentage point.
The change in the average rate this week was so minimal that most borrowers would not have noticed. Excluding the previous week, this week’s average 30-year rate was the lowest since the week ending March 28, also at 6.69%.
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Rates have been declining since April
While weekly fluctuations in mortgage rates may be distracting, the larger trend shows that rates have been decreasing gradually since April. In April, the 30-year mortgage rate averaged 7.04%, followed by 7.01% in May, 6.82% in June, and 6.76% in the first three weeks of July. Although the drop has been minimal over three months, it seems that mortgage rates are starting to trend downward.
Due to lower rates, the average monthly mortgage payment decreased for home buyers in June compared to May, according to the Mortgage Bankers Association. The median principal-and-interest payment in June was $2,167, down from $2,219 in May, resulting in a $52 decrease.
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Existing home prices reach new heights
While interest rates are on a downward trend, home prices are not following suit. In June, the median price for an existing home reached a record high of $426,900, as reported by the National Association of Realtors. This marked a 4.1% increase from the previous year and a significant 49.6% increase from June 2019.
With the rise in prices in June, fewer individuals purchased homes — leading to an increase in the inventory of unsold homes on the market, according to NAR. By the end of June, there were 1.32 million homes available for sale, up by 250,000 compared to the previous year.
With more options for buyers, the real estate market is gradually transitioning from a seller’s market to a balanced market. Consequently, more buyers are now able to request home inspections “because buyers now realize they have a bit more leverage compared to a year ago,” as stated by Lawrence Yun, NAR’s chief economist, during a conference call.
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