Housing News

Mortgage Rates Rise Slightly as the Summer Homebuying Season Approaches

Mortgage rates ticked up ever so slightly as oil prices and inflation remained elevated.

Interest rates averaged 6.52% for 30-year, fixed-rate loans in the week ending June 11, according to Freddie Mac data.

That was up just a bit from 6.48% in the previous week. However, rates were below this time last year, when they averaged 6.84%.

The lower annual rates have helped homebuyers. Existing home sales rose 3.2% year-over-year in May, according to a recent National Association of Realtors report.

“In May, reports on the national housing market showed a healthy bounce, as homebuyers were drawn into the market by more [housing] inventory and as more were coming to terms with rates in the mid-6% range,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. The multiple listing service covers the mid-Atlantic region.

Mortgage applications to purchase a home jumped 17% week-over-week in the week ending June 5, according to the Mortgage Bankers Association (MBA). They were also up 4% year-over-year, according to MBA’s unadjusted purchase index.

Applications to refinance an existing loan were up 15% from the prior week and shot up 20% from last year, according to MBA.

“Mortgage rates were volatile last week as news from the Middle East continues to drive markets,” said MBA Chief Economist Mike Fratantoni in a statement. “Both refinance and purchase applications rebounded coming out of the Memorial Day holiday week.”

Observers believe that rates aren’t likely to go back into the 5% range while the war in Iran continues and inflation rises. Inflation jumped 4.2% year-over-year in May, according to the Consumer Price Index.

“It is very likely that we will see mortgage rates increase after this week’s Consumer Price Index report that showed inflation hitting a three-year high,” said Sturtevant.

How that affects the housing market remains to be seen.

Summer is generally a busy homebuying and selling season as families want to get settled into their new homes before the school year starts.

“We’re seeing homebuyers look past the short-term rate fluctuations and actively enter the market, signaling renewed confidence in homeownership opportunities,” said Freddie Mac Chief Economist Sam Khater in a statement.