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Mortgage rates continue to fall from their recent 7% highs, lowering borrowing costs for hopeful house hunters who may eagerly be looking for any type of price break. This week marked the third consecutive week for mortgage rate cuts, following signs of cooling inflation, Freddie Mac reports.
“These lower mortgage rates, coupled with the gradually improving housing supply, bodes well for the housing market,” says Sam Khater, Freddie Mac’s chief economist. “Aspiring homeowners should remember it’s important to shop around for the best mortgage rate as they can vary widely between lenders.”
At this week’s 6.87% rate average and assuming a 20% down payment, a monthly mortgage payment on a median-priced $400,000 home would be about $2,101, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®.
Could mortgage rates drop even further? Inflation numbers have “eased somewhat, but the Fed still has a long to go before cutting interest rates,” Lautz says. “However, the Fed has left the door open for one rate cut in 2024, which could assist housing affordability.” The Fed’s short-term benchmark rate does not have a direct impact on mortgage rates, but does often influence them.
Still, it may pose a dilemma for buyers waiting for lower rates. After all, today’s home buyers face limited housing inventories, although that has improved compared to last year. “If rates come down, more buyers will inevitably join the homebuying market, which could result in bidding wars,” Lautz says. “Timing a market based only on interest rates may not yield fruitful results.”
Freddie Mac reports the following national averages for mortgage rates for the week ending June 20:
- 30-year fixed-rate mortgages: averaged 6.87%, dropping from last week’s 6.95% average. Last year at this time, 30-year rates averaged 6.67%.
- 15-year fixed-rate mortgages: average 6.13%, falling from last week’s 6.17% average. A year ago, 15-year rates averaged 6.03%.
