Mortgage Rates

Purchase mortgage rates rise ahead of Federal Reserve meeting

After jumping 20 basis points last week to 5.50%, purchase mortgage rates increased this week to 5.54%

Purchase mortgage rates increased for the second consecutive week but at a slower pace as the market chewed on the latest U.S. inflation data, the expectation of a tightening Federal Reserve’s monetary policy, and its economic impacts.  

After jumping 20 basis points last week to 5.50%, purchase mortgage rates increased this week to 5.54%, according to the latest PMMS survey from Freddie Mac. The index compile rates reported by lenders during the past three days.   

“The housing market remains sluggish as mortgage rates inch up for a second consecutive week,” said Sam Khater, Freddie Mac’s chief economist. “Consumer concerns about rising rates, inflation and a potential recession are manifesting in softening demand. As a result of these factors, we expect house price appreciation to moderate noticeably.” 

Mortgage rates tend to align with the 10-year U.S Treasury yield, which increased 13 basis points in one week to 3.15% Wednesday. The federal funds rate doesn’t directly dictate mortgage rates, but it does steer market activity to create higher rates and reduce demand.

The 10-year benchmark reflects that, in June, the consumer price index rose 9.1% on a year-over-year basis, far above Wall Street’s estimate of 8.8% and the fastest pace since November 1981. 

Wall Street observers believe the Federal Reserve will increase rates by 75 or 100 basis points later this month to reduce inflation, generating concerns that a recession is just around the bend. 

How auction buyer data foreshadows housing market shifts

The retail housing market data, released by Redfin at the end of June, shows the median asking price for newly listed homes for sale in the four weeks ending June 26 dropped 1.5% from an all-time high in the previous month even while a record share of all homes for sale saw price drops.  

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Weakening economic outlook, high inflation and affordability challenges have taken a toll on buyer demand. 

According to the Mortgage Bankers Association (MBA), the market composite index, a measure of mortgage loan application volume, declined 6.3% for the week ending July 15. The refinance index dipped 4% from the previous week, and the purchase index decreased 7%.

On HousingWire’s Mortgage Rates Center, Black Knight’s pricing engine Optimal Blue had 30-year conforming rates at 5.789% on Wednesday, slightly up to 5.782% the previous week. 

Meanwhile, the 30-year fixed-rate jumbo was at 5.245% Wednesday, down from 5.322% the previous week. The Optimal Blue index includes some refinancing data — but excludes cash-out refis to avoid skewing averages.

According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.75% with an average of 0.8 point, up from last week’s 4.67%. The 15-year fixed-rate mortgage averaged 2.12% a year ago. 

The 5-year ARM averaged 4.31% this week, down from 4.35% the previous week. The product averaged 2.49% a year ago. 

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