Mortgage rates have been falling since late April as closely watched data showed the economy was cooling and the Federal Reserve could begin cutting interest rates as early as September.
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The Mortgage Bankers Association’s (MBA) weekly lender survey released on Wednesday showed that homebuyer demand for purchase loans picked up for a third straight week last week after mortgage rates hit their lowest levels in months.
The latest MBA Weekly Applications Survey shows that purchase-to-buy mortgage applications were up 1% last week compared to the previous week, after adjusting for the Juneteenth holiday.
Applications for government-backed FHA and VA home purchase loans increased by more than 2% compared with the same period last year, but overall home purchase loan applications were still down 13% from the same period last year.
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“Mortgage rates were mostly lower last week, with the 30-year fixed rate inching down to 6.93%, the lowest level in more than three months,” MBA deputy chief economist Joel Kan said in a statement. “However, the lower Low interest rates are still not enough to lure refinancing borrowers back, as most continue to hold on to mortgages with much lower rates.”
While essentially unchanged from the previous week, refinancing requests were up 26% from a year ago.
Mortgage rates have been falling since late April as closely watched data releases, including a deceleration in consumer prices in May and rising jobless claims reports, suggested the economy is cooling and the Fed could begin cutting interest rates as early as September. .
The next major move in mortgage rates could be triggered on June 28, when the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, is updated with May data.
Mortgage rates level off
The average interest rate on a 30-year fixed-rate conforming loan was 6.85% on Tuesday, essentially unchanged from late last week, according to rate lock data tracked by Optimal Blue. But this is down 42 basis points from the 2024 high of 7.27% recorded on April 25.
Optimal Blue data shows that interest rates hit a 2024 low of 6.50% on February 1, down 1.33 percentage points from the 2023 peak of 7.83% on October 25.
Mortgage rates expected to continue falling
Source: Fannie Mae Housing Forecast, June 2024; MBA Mortgage Finance Forecast, June 2024.
MBA economists said in a June 24 forecast that they expect 30-year fixed-rate loan rates to fall to 6.6% in the fourth quarter of 2024 and to an average of 6.0% in the fourth quarter of 2025.
In a June 10 forecast (released publicly on June 21), Fannie Mae economists said they expected 30-year fixed-rate loans to fall to 6.7% in the fourth quarter of 2024 and to 6.7% by the end of next year. 6.3%.
Fannie Mae forecasters say more listings and lower mortgage rates will increase home sales by 9.3% in 2025, to 5.3 million transactions.
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