According to data compiled by Bankrate, average mortgage interest rates, including rates for 30-year fixed, 15-year fixed, 5/1 ARMs, and jumbo loans, dropped across the board from a week ago.
| Product | Rate | Last week | Change |
|---|---|---|---|
| 30-year fixed | 7.15% | 7.32% | -0.17 |
| 15-year fixed | 6.46% | 6.57% | -0.11 |
| 5/1 ARM | 6.24% | 6.25% | -0.01 |
| 30-year fixed jumbo | 7.18% | 7.32% | -0.14 |
This is coming after June Consumer Price Index (CPI) report showed that the US inflation slowed down last month and was better than forecasts from analysts.
Though the inflation figure was still higher than desired, the Federal Reserve decided not to increase interest rates again at its June 14 meeting, after hiking it at 10 consecutive meetings in 2022 and 2023.
The central bank’s federal funds rate will remain at a range of 5.00% to 5.25% for now.
The decision is yet to be understood by analysts – is the Fed done fighting inflation, or is this simply a pause?
According to Lisa Sturtevant, chief economist at Bright MLS, the Fed will resume interest rate hikes given its target of 2% inflation.
“It is extremely unlikely that the Fed will back down from that goal since they have been out so forcefully and consistently with the intent to reach that milestone,” says Sturtevant.
“As a result, we’re probably going to see the Fed resume rate increases at its next meeting, which could raise the probability that the economy will head into a mild recession if not later this year, then by the beginning of next year.”
The Fed does not set mortgage rates directly, but the interest rates it sets greatly influence it. Mortgage rates change on a daily basis according to economic factors such as inflation, employment, as well as the broader outlook for the economy.
A lower inflation rate is good news for mortgage rates, but the potential for additional hikes from the central bank this year will keep mounting pressure on already high rates.
“Mortgage rates will continue to ebb and flow week to week, but ultimately, I think rates will stick to that 6% to 7% range we’re seeing now,” Jacob Channel, senior economist at loan marketplace LendingTree opined.