Mortgage rates fall for second week in a row
The numbers: Mortgage rates fell for the second week in a row, on the back of data indicating that inflation in the U.S. economy was softening.
The 30-year mortgage fell to the lowest rate since March.
The decrease in rates caused the market composite index — a measure of mortgage application volume — to inch up in the past week, according to the Mortgage Bankers Association (MBA) on Wednesday.
The market index rose 0.9% to 210.4 for the week ending June 14 from a week before. A year ago, the index stood at 209.8.
Key details: The purchase index — which measures mortgage applications for the purchase of a home — rose 1.6% from a week prior.
The refinance index fell 0.4%.
The average contract rate for the 30-year mortgage for homes sold for $766,550 or less was 6.94% for the week ending June 14. That’s down from 7.02% the week before.
The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 7.12%, down from 7.18% the previous week.
The average rate for a 30-year mortgage backed by the Federal Housing Administration was 6.79%, down from 6.87% a week prior.
The 15-year was down to 6.47%, from 6.6% in the previous week.
The rate for adjustable-rate mortgages was down to 6.27%, from 6.45%.
The big picture: As the U.S. economy shows signs of slowing down, mortgage rates dip. The market is expecting the Federal Reserve to cut interest rates, as economic indicators such as the May Consumer Price Index showed signs of a slowdown, which will in turn pressure mortgage rates down further.
But lower rates may not be enough to make it more affordable to buy a home. Inventory is another drag on the housing market. Though lower mortgage rates translate to lower monthly mortgage payments, the dip could also trigger more aspiring homeowners to enter the market. With a housing shortage, it could drive up competition for homes, and therefore home prices.
What the MBA said: “Purchase applications increased a small amount for the week, led by applications for conventional loans,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, said in a statement.
Though “purchase volume is still more than 10% behind last year’s pace,” he added, the “MBA is forecasting a pickup in home sales for the remainder of the year as more inventory is hitting the market.”