Mortgage rates continued to rise this week, with the average rate for a 30-year, fixed-rate mortgage climbing to 6.34%, up from 6.30% last week, according to Freddie Mac’s Primary Mortgage Market Survey.
A year ago at this time, the average rate for a 30-year was 6.12%.
“The 30-year fixed-rate mortgage increased again this week but remains below its 52-week average of 6.71 percent,” says Sam Khater, chief economist for Freddie Mac, in a statement. “The last few months have brought lower rates and as indicated by the recently reported increase in pending home sales, homebuyers are feeling more confident to get into the market.”
The average rate for a 15-year fixed-rate mortgage was 5.55%, up from 5.49% last week and up from 5.25% a year ago.
“An October rate cut is likely a done deal, as last month’s cut was probably the first step in a gradual but steady interest rate reduction,” says Michael Faulwell, CFO for SchoolsFirst Federal Credit Union, in a statement. “In theory, the next rate cut will have a trickle-down effect, lowering lending costs across the board for mortgage loans. But actual savings for the average household won’t be realized for at least a few months after rates are reduced.”
“The mortgage market has already priced in the probable October interest rate reduction, but it may take a series of rate cuts to see mortgage rates tick downward in a significant way,” Faulwell says. “If we do see a gradual interest rate reduction over time, the mortgage market is likely to experience an uptick in borrower demand, especially for refinances, as those who took out mortgages at their peak two years ago will want to take advantage of lower rates.”
“We may see investors who are expecting a rate cut buying Treasury bonds, which will ultimately push mortgage rates down,” Faulwell adds. “Likely, this will happen before the October Fed announcement. Mortgage rates will likely hover above the 6 percent range for the remainder of the year.”
Photo: Bikram Sharma