It’s been several weeks since the main home mortgage rate has averaged over 7%. Prospects for buyers continued to brighten this week as Freddie Mac’s Primary Mortgage Market Survey showed the 30-year fixed-rate mortgage (FRM) averaged 6.46%.
“Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year,” said Sam Khater, Freddie Mac’s chief economist.
“Earlier this month, rates plunged and are now lingering just under 6.5%, which has not been enough to motivate potential homebuyers. We expect rates likely will need to decline another percentage point to generate buyer demand.”
Still, this week’s rates are a big improvement. A year ago at this time, the 30-year FRM averaged 7.23%.
Now, it's home prices that are the problem
Many housing experts say home prices, which are still near a record high in many areas of the country, are a bigger obstacle to a home purchase and it’s showing up in the data.
The Mortgage Banker’s Association reports mortgage applications decreased a whopping 10.1% last week from the previous week.
“Both mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a quick drop in mortgage rates,” said Joel Kan, MBA’s vice president and deputy chief economist.
“Applications were lower last week, led by a 15% decrease in refinance activity, despite the 30-year fixed mortgage rate declining for the third consecutive week to 6.5%, the lowest since May 2023.”
Kan said the level of refinance applications remains 23% higher than a month ago and the past two weeks have seen the strongest weekly readings since 2022, as borrowers have sought lower rates.
