Mortgage rates fell further below 7%, dropping for the third week in a row on news of cooling inflation and an expectation the Federal Reserve eventually could cut rates.
Mortgage giant Freddie Mac said the 30-year fixed-rate mortgage averaged 6.87% in the week ended Thursday, down from 6.95% the previous week but higher than the 6.67% from the same week last year.
The 15-year fixed-rate mortgage averaged 6.13%, down from 6.17% last week but above the same time a year ago when it was 6.03%.
Until recently, rates had topped 7% for about two months, hindering home sales as some consumers postponed buying decisions.
“These lower mortgage rates coupled with the gradually improving housing supply bodes well for the housing market,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
This month, the Federal Reserve left its overnight lending rate unchanged, maintaining a target rate for banks between 5.25% and 5.5%, a 22-year high.
A majority of analysts polled by Bankrate.com expect mortgage rates to keep falling in the coming week.
“Weak retail sales data may encourage the Fed to lower its overnight rate,” said Dick Lepre, senior loan officer for Realfinity in Alamo, California. “Both Treasury yields and mortgage rates should fall.”
But Denise McManus, global real estate adviser for the Engel & Völkers residential brokerage, expects rates to stay flat.
“Nothing of significance is coming to make the rates move in either direction,” she told Bankrate. “We are all holding our breath until the September Fed meeting.”
Meanwhile, for the week ended June 14, mortgage applications increased 0.9% on a seasonally adjusted basis compared to the previous week, according to the latest data from the Mortgage Bankers Association Market Composite Index. Refinance applications decreased 0.4% from the previous week but were 30% higher than the same week a year ago. Purchase applications inched up 2%.