Mortgage rates fall for the first time in three weeks


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Mortgage rates dropped this week after a three-week climb, as rates remain volatile amid conflicting economic indicators. The 30-year fixed-rate mortgage averaged 6.71% in the week ending June 8, down from 6.79% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed rate was 5.23%. “While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective homebuyers,” said Sam Khater, Freddie Mac’s chief economist. With rates much higher now than the fixed rate that many current homeowners bought or refinanced into, they are reluctant to put their homes on the market and trade their ultra-low interest rate for something much higher. This is leading to low inventory of homes to buy. Mortgage rates topped 5% for the first time since 2011 a little more than a year ago and have remained over 5% for all but one week during the past year. Since then they have gone as high as 7.08%, last reached in November. Since mid-March, rates have gone up and down but stayed under 6.5% until last week. The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit. All eyes on the Fed Mortgage rates are experiencing daily fluctuations driven by volatility and uncertainty in the economy, said Jiayi Xu, an economist at, and climbed following the trend of 10-year Treasury yields, as investors evaluate the possible direction of Federal Reserve interest rate policy at its meeting next week. In speeches last week Federal Reserve officials mentioned skipping a rate hike in June, enabling the Fed to gather more data before making any decisions, said Xu. While the comments are not official policy, she said, “by framing the discussion in terms of “skipping” rather than “pausing,” policymakers are indicating that the current interest rate may not have reached its peak for this particular economic cycle.” The Fed does not set the interest rates that borrowers pay on mortgages directly, but its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow. More hikes may be necessary to cool inflation and the hot job market. “May’s jobs report reflected another month of stronger employment activity with higher-than-expected net new jobs added to the market,” said Xu. “However, the simultaneous rise in the unemployment rate in May showed mixed signals in the labor market, indicating the complexities involved in interpreting economic data and introducing uncertainties in the upcoming Federal Reserve policy decisions.” Xu added: “While the potential for another rate hike raises the prospect of increased mortgage rates, the objective of curbing inflation will ultimately lead to a decline in mortgage rates, bringing much-desired stability to the market.” Mortgage applications decrease Home buyers remain sensitive to mortgage rate spikes, with mortgage applications dropping last week, according to the Mortgage Bankers Association. “The housing market has gotten off to a slow start this summer due to higher mortgage rates, low inventory, and economic uncertainty,” said Bob Broeksmit, MBA president and CEO. “The labor market continues to be exceptionally strong, which could bring more buyers back into the market once rates move away from their recent highs.” But they’ll have to come down significantly before some home buyers get in the market. The most common mortgage rate that is cited as comfortable for potential buyers constrained by finances was between 3% and 3.25% — less than half of today’s level — according to a new survey by and Censuswide. “Even for individuals with plans to purchase within the next year, almost 80% of them expressed concerns about being priced out of the market if housing prices and mortgage rates continue to rise,” said Xu. “Consequently, affordability will play a crucial role in helping them achieve their goal of purchasing a home.” For more CNN news and newsletters create an account at

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