Mortgage rates are stuck, along with the rest of the housing market.
The 30-year, fixed-rate mortgage averaged 6.84% in the week ended June 12, according to mortgage giant Freddie Mac, which buys loans from banks, bundles them into securities, and sells them. That's just 0.01% lower than the previous week.
The 15-year, fixed-rate mortgage averaged 5.97% during the same time, slightly lower than the pervious week's average of 5.99%.
A similar trend appeared in daily measures of mortgage rates. As of Wednesday afternoon, the 30-year, fixed-rate mortgage had eased to 6.89%, and the 15-year, fixed had declined to 6.2%.
Though minute, the downward pressure was mostly the result of new data about the economy, including a reading on consumer price growth showing that prices grew more slowly in May than expected.
When data performs better than anticipated, investors typically alter their behavior, creating changes in the bond market that can disrupt mortgage rates.
As Matthew Graham, chief operating officer of Mortgage News Daily, put it in a blog post on Wednesday, “inflation is one of the most basic inputs for the bond market. Bonds, in turn, dictate interest rate movement.”
“In general, higher inflation coincides with higher rates and vice versa,” Graham added. “Inflation data came out much lower than the market anticipated. Bonds improved quickly in response thus allowing mortgage lenders to offer lower rates.
The dam holding back buyer demand has yet to break
Though mortgage rates are (slightly) lower on a weekly basis and down from what they were a year ago, it’s all about perspective, and the upswing in the past few months has left buyers wary.
A weekly survey from the Mortgage Bankers Association measuring applications for loans found that more buyers applied for one in the week ended June 6. Compared to the previous week, applications increased nearly 13%.
The data creates a nuanced picture of buyer demand, and again, it’s all about perspective.
On the one hand, purchase applications are up 20% from a year ago. But, on the other hand, this week’s data is the first weekly increase in four weeks. And at the same time, the number of houses for sale is increasing, and in some markets, they are climbing to prepandemic levels for the first time in years.
In other words, even though buyers have more choices when it comes to buying a home, many could still be waiting for mortgage rates to come down.
Taken together, the stagnantion in the housing market is indicative of just how difficult it is to predict when the “recovery” will come, and just how important mortgage rates are to consumer sentiment.
"The mortgage rate is the magic bullet, and we are just waiting and waiting as to when that could come down," Lawrence Yun, chief economist at the National Association of Realtors, said during a presentation last week. "Housing demand appears to be there, but just not getting realized at the moment.”