MORTGAGE RATES INCH BACK UP
The 30-year fixed-rate mortgage (FRM) averaged 7.18% this week, back to where it was two weeks ago after a dip to 7.12% last week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac, released Thursday.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 7.18% as of September 14, 2023, up from last week when it averaged 7.12%. A year ago at this time, the 30-year FRM averaged 6.02%.
- 15-year fixed-rate mortgage averaged 6.51%, down from last week when it averaged 6.52%. A year ago at this time, the 15-year FRM averaged 5.21%.
What the experts are saying:
“Mortgage rates inched back up this week and remain anchored north of seven%,” said Sam Khater, Freddie Mac’s chief economist. “The reacceleration of inflation and strength in the economy are keeping mortgage rates elevated. However, potential homebuyers can still benefit during these times of high mortgage rates by shopping around for the best rate quote. Freddie Mac research suggests homebuyers can potentially save $600-$1,200 annually by applying for mortgages from multiple lenders.”
Jiayi Xu, economist at Realtor.com, commented:
“The 30-year mortgage increased 0.06%age points to 7.18% this week, as investors focus on the impacts of the uptick in headline inflation on next week’s Fed rate decision. While August’s headline inflation was driven up by energy prices, the core CPI, which excludes volatile food and energy items and which the Fed watches more closely, provides more evidence that core inflation is trending down toward pre-pandemic levels. Despite this welcome development, the elevated level and the slow deceleration rate suggest it will take time to get inflation back down to the 2% target level.
“Looking ahead, we expect that inflation will continue to move into the right direction as shelter costs, the most important component of the core CPI, have moved down for five consecutive months on a year-over-year basis and Realtor.com’s median asking-rents indicate rental prices have been gradually declining. However, while the CPI shelter index has trended favorably, pulling down core inflation, the index typically tracks prices with a lag, so the recent price rebound within the for-sale housing markets may add some uncertainties. Overall, we expect the Fed will maintain its “wait-and-see” approach in its next FOMC meeting and closely monitor future data.
“As many existing homeowners felt locked-in by today’s elevated mortgage rates and stayed put, home shoppers are seeing fewer homes actively for sale. In fact, Realtor.com’s recent Site Visitor’s Survey highlights that the struggle to find a suitable home to purchase has become a more pressing concern for today’s homebuyers compared to the past. Specifically, first-time home buyers are grappling with the daunting task of locating a residence that fits within their budgetary constraints, while repeat home buyers are facing challenges in finding properties that align with their unique requirements. However, the best time to buy for the rest of the year, with more price reductions and more fresh listings hitting the market, is approaching, offering a ray of hope to both types of homebuyers in this challenging environment.”