Housing News

Mortgage Interest Rates Edge Lower Giving the Housing Market a Boost

Mortgage rates moved down this week as the war in Iran appears to be moving closer to an end.

The average rate on a 30-year, fixed-rate home loan fell to 6.47% for the week ending June 18, down from 6.52% a week earlier, according to Freddie Mac.

Interest rates also remained below the 6.81% average recorded at this time last year.

“Incoming data continues to reflect a resilient consumer, with…sales improving and pending home sales strengthening, suggesting purchase demand is continuing to modestly improve,” said Sam Khater, Freddie Mac’s chief economist, in a statement.

Lower borrowing costs compared with a year ago continue to improve affordability for many homebuyers and homeowners hoping to refinance their existing loans.

A homebuyer purchasing a $400,000 home with 20% down would pay about $74 less per month at this week’s average mortgage rate than they would have paid a year ago.

At 6.47%, the monthly principal and interest payment comes to roughly $2,015. That’s compared with about $2,089 when rates averaged 6.81% at this time last year.

Over a year, that’s nearly $900 in savings or more than $26,000 over the life of a 30-year fixed-rate loan.

Buyers are taking advantage of those lower rates.

Pending home sales, which measure signed contracts on existing homes, climbed 3.8% in May from April and were up 4.8% from a year earlier, according to the National Association of Realtors. Since pending sales typically lead to completed transactions, the report points to stronger existing-home sales in the coming weeks.

Annually, more buyers submitted mortgage applications. These applications declined 3% from the previous week but remained 3% higher than a year earlier, according to the Mortgage Bankers Association (MBA).

Refinance applications fell 5% week over week, but were still 17% above year-ago levels, according to MBA.

“Purchase applications continue to run modestly ahead of last year, with last week’s volume up 3% on an annual basis,” said MBA Chief Economist Mike Fratantoni in a statement.