Mortgage Rates

Mortgage Charges Proceed To Ease Regardless of Inflation Worries

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According to a Freddie Mac economist, markets agree that inflation rises are temporary.

Mortgage rates continue to fall, despite fears the Federal Reserve will eventually have to take action to fight inflation, with 30-year fixed-rate mortgage rates remaining below 3 percent.

Sam Khater | Photo credit: Freddie Mac

“Mortgage rates continue to fall as markets believe that inflation rises are temporary,” Freddie Mac’s chief economist Sam Khater said in a statement. “While mortgage rates are low, purchase demand has weakened in recent months, mainly due to affordability restrictions due to high home prices. With inventory being scarce, the slowdown in demand has not yet affected prices, which means summer is likely to remain a strong sellers’ market. “

For the week ending June 17, Freddie Mac’s weekly Primary Mortgage Market Survey reported average interest rates on the following types of loans:

  • To the 30-year fixed-rate mortgagesInterest rates averaged 2.93 percent with an average 0.7 point value, compared to 2.96 percent the previous week and 3.13 percent a year ago. Interest rates on 30-year loans hit an all-time low of 2.65 percent in the week ending January 7, 2021 in 1971 records.
  • Prices on 15-year fixed-rate mortgages 2.24 percent average with an average 0.6 point, up slightly from 2.23 percent last week but lower from 2.58 percent a year ago. The all-time low for 15-year fixed-rate mortgages in records from 1991 was also recorded in the week ended January 7, 2021, when interest rates averaged 2.16 percent.
  • To the 5-year hybrid Treasury indexed floating rate mortgage (ARM) loan interest rates averaged 2.52 percent averaging 0.3 points, down from 2.55 percent last week and 3.09 percent a year ago. 5-year ARM loan interest rates hit an all-time low of 2.56 percent for the week ended May 2, 2013, in Freddie Mac’s 2005 records.

Source: Freddie Mac Primary Mortgage Market Survey.

Freddie Mac’s survey tracks conventional, compliant home loans for borrowers who are 20 percent behind and have excellent credit ratings. Borrowers who take out larger loans, make smaller down payments, or have poor credit ratings can expect higher interest rates.

Mortgage rates rose in February and March on fears that the Fed will soon be forced to take action to fight inflation. The consumer price index was up 5.0 percent year-on-year in May, the largest annual increase since August 2008.

This week, Fed policymakers reiterated their commitment to continue buying $ 80 billion in long-term government bonds and $ 40 billion in mortgage-backed securities every month “until substantial further progress is made” towards the employment and price stability goals Fed. These purchases are credited to help keep mortgages and other long-term interest rates down.

In a statement, members of the Federal Reserve’s Open Market Committee acknowledged inflation concerns but described them as largely temporary. For the time being, the Fed is ready to allow inflation to rise “moderately above 2 percent for a while” as long as longer-term expectations remain “well anchored” at 2 percent.

However, in a forecast released this week, Fannie Mae economists warned that rents and house prices are an integral part of inflation and that rising housing costs could drive inflation out of the Fed’s comfort zone.

Fannie Mae economists downgraded their second- and third-quarter home sales forecast, citing supply constraints and restrictions on home builders that are slowing home sales and driving up house prices and rents.

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