Rates Are Still Going Up Despite Freddie Taking a Break

Despite expectations of mortgage rates remaining steady after the Fed’s recent rate pause, data from Freddie Mac shows a slight increase of approximately 0.30% since the June 14 announcement. 

Moreover, with the anticipated rate hike at the upcoming July 25-26 meeting, mortgage rates are projected to climb even further. The looming questions remain: How high will the rates go, and how long will they remain elevated? 

In this week’s mortgage news insights, we look to some industry experts to shed light on these uncertainties.

Latest average U.S. Mortgage Rates 2023-07-07

• 30-year fixed: 7.21% (previous week: 7.10%)
• 15-year fixed: 6.53% (previous week: 6.47%)
• 30-year FHA index: 6.852% (previous week: 6.668%)
• 30-year fixed rate Jumbo index: 7.172% (previous week: 6.987%)

Stay informed with Homefinity about rate fluctuations that could impact your loan decision.

Have rates reached their peak?

CBS News recently consulted with leading experts on mortgage rates, and while the bad news persists that they are set to remain high for a considerable period, there is a silver lining. 

Peter Idziak, a senior associate specializing in mortgage law at Polunsky Beitel Green, predicted that rates might reach or briefly exceed last October’s highs of nearly 7.2% later this year before declining below 6% towards year-end.

Furthermore, Noah Damsky, CFA and principal of Marina Wealth Advisors, asserted that rates are nearing their peak but went on to say they would likely “remain below 8%.” If inflation slows and the economy decelerates, he added, the Federal Reserve should reduce rates in 2024. 

Redfin says nearly everyone is staying put

According to a Redfin analysis of Federal Housing Finance Agency (FHFA) data looking at the fourth quarter of 2022 (the most recent data period available), nearly everyone who currently has a mortgage is not looking to sell anytime soon. 

Their data shows that approximately 80% of homeowners with mortgages enjoy interest rates below 5%, while about a quarter benefit from rates below 3%. 

However, with rates currently hovering around 7%, the number of homeowners opting to sell their properties remains low. As you can imagine, this exacerbates the lack of available homes on the market. 

How would a drop in interest rates affect the situation?

A recent Redfin survey revealed that around a quarter of potential home sellers express a heightened sense of urgency if rates were to drop to 5% or below. This sense of urgency skyrockets to nearly 80% if rates were to reach 3% or lower. 

Overall, 91.8% of homeowners in the United States with mortgages enjoy an interest rate below 6%. This figure, although slightly lower than the previous record of 92.9% reached in mid-2022, indicates a significant majority of current mortgage holders benefiting from favorable rates.

More than 92% of homeowners with mortgages currently enjoy rates below the weekly average of 6.71%, which stands near a two-decade high. The scarcity of new listings today can be primarily attributed to homeowners holding steadfast to their comparatively low mortgage rates. 

Numbers like this strongly indicate that the lack of inventory isn’t going away anytime soon. 

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That’s it for this week. Keep Homefinity bookmarked in your browser to keep your finger on the pulse of the real estate and housing market.

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