Housing News

Mortgage Rates Tick Down for Second Week in a Row

For the second week in a row, mortgage interest rates ticked down slightly.

Mortgage rates averaged 6.84% for 30-year fixed-rate loans in the week ending June 12, according to Freddie Mac data. They were down from 6.85% in the previous week and 6.95% in the same week last year.

“Mortgage rates have moved within a narrow range for the past few months and this week is no different,” said Freddie Mac Chief Economist Sam Khater in a statement. “Rate stability, improving inventory and slower house price growth are an encouraging combination as we celebrate National Homeownership Month.”

The U.S. Federal Reserve is expected to cut its interest rates twice this year. While separate from mortgage rates, this should put downward pressure on mortgage rates making it more affordable to purchase a home or refinance an existing loan.

While still elevated, rates are still staunchly below 7% giving budget-conscious homebuyers a bit of a break.

Even small changes in rates can have large financial impacts. Someone buying the typical home would save $117 a month if rates fell from 7% to 6.5%. That adds up to $1,404 a year and $42,120 over the life of a 30-year loan.

This assumes someone put down 20% on a $440,000 home. This was the median home list price in May, according to Realtor.com data.

In addition, there are more homes for sale. There were 31.5% more properties on the market in May compared to a year earlier, according to Realtor.com.

Those additional homes are forcing sellers to compete for cost-conscious buyers. More sellers are offering concessions and cutting prices to lure buyers. The percentage of price reductions was up 31.6% year-over-year, according to Realtor.com.

That competition could heat up if rates come down as they are predicted to over the next few months.

“I expect mortgage rates to decline more significantly at the end of the summer, leading up to the Fed’s September meeting,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. The multiple listing service covers the mid-Atlantic region. “Lower rates could bring more buyers out this fall.”