Mortgage rates fall below 7% again

Home mortgage rates have fallen for the third straight week, dropping below 7% - UnSplash +

Is there finally some hope for homebuyers?

Just in time for the peak of the spring homebuying season, mortgage rates are back below 7%, making homes slightly more affordable.

For the third straight week, the average 30-year fixed-rate mortgage has declined from the week before.

“Spring homebuyers received an unexpected windfall this week, as mortgage rates fell below the seven percent threshold for the first time in over a month,” said Sam Khater, Freddie Mac’s chief economist.

“Although this week’s data on previously owned home sales showed a decline, total inventory of both new and existing homes is up. Greater supply coupled with the recent downward trend in rates is an encouraging sign for the housing market.”

The 30-year fixed-rate mortgage averaged 6.94% percent as of May 23, 2024, down from last week when it averaged 7.02%. A year ago at this time, the 30-year rate averaged 6.57%.

All eyes on the Fed

What’s behind the downward trend? Signals from the Federal Reserve suggest the Fed could start cutting rates later this year if the economy begins to soften. 

JPMorgan CEO Jamie Dimon this week said it’s growing more possible that the economy will have a “hard landing,” resulting in a recession. Any kind of slowdown in economic growth would likely result in one or two rate cuts.

Mortgage rates are falling as sales of existing homes are slowing. The combination of higher home prices and mortgage rates above 7% has kept many buyers on the sidelines.

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