Housing News

Mortgage Interest Rates Edge Higher as Housing Market Continues to Adjust

Mortgage interest rates edged higher this week even as a growing supply of homes for sale and lower home prices continue to bolster the housing market.

The average rate on a 30-year, fixed-rate mortgage rose to 6.69% for the week ending Aug. 6, according to Freddie Mac. That was up from 6.66% a week earlier and marked the first time in more than 44 weeks that the average mortgage rate came in above the same week a year earlier.

“While mortgage rates continue to influence affordability, the housing market is showing signs of adjustment, with listing prices modestly below year-ago levels and for-sale inventory improving from the limited supply seen in recent years,” said Sam Khater, Freddie Mac’s chief economist, in a statement.

Recent mortgage rate volatility has made budgeting more important for some homebuyers. Danielle Hale, chief economist at Realtor.com, said borrowers should prepare for continued fluctuations while remaining ready to act if rates improve.

“Rate-test your budget, so you know how small changes in mortgage rates will affect your total monthly housing payment,” Hale said in a statement. “Also, stay close with your lender to take advantage of potential dips in mortgage rates that are likely to occur if market conditions improve.”

A homebuyer purchasing a $400,000 home with 20% down would pay about $2,062 a month in principal and interest at this week’s average mortgage rate of 6.69%.

Mortgage demand softened last week as borrowing costs remained elevated. Mortgage applications fell 2.9% from the previous week, according to the Mortgage Bankers Association.

Rates have been elevated partly in response to the war in Iran raising oil prices

“There is some tentative good news: preliminary reports show some progress on geopolitical fronts, which has tempered the rise in daily mortgage rates,” said Kara Ng, senior economist at Zillow, in a statement. “Still, the backdrop remains complicated.”

Mortgage rates, however, tell only part of the affordability story.

The housing market has continued to shift in homebuyers’ favor in recent months. Median home list prices were 2.4% lower than a year earlier, marking the ninth consecutive month of annual price declines, according to Realtor.com.

Housing stock has also continued to improve, giving prospective homebuyers more homes to choose from than they had during the tight housing market of recent years.