Fixed mortgage rates reportedly rose from 6.81% to 6.96%, making it the highest point of the year. Some experts believe it will get lower based on the new inflation data.
Mortgage Rates Hit the Highest Point of The Year
As reported by Freddie Mac, the average interest rate for 30-year fixed mortgage rates experienced a slight rise, climbing from 6.81% to 6.96% compared to the previous week. However, there is an expectation of a potential decrease in mortgage rates next week.
This anticipation stems from recent government data released on Wednesday, indicating a cooling of inflation to its lowest level since early 2021.
According to Yahoo! Finance, prospective homebuyers may face disappointment as the current mortgage rates stand at 6.96%, resulting in a monthly payment of $2,565 for a median-priced home valued at $445,000. Comparatively, a week ago, when mortgage rates were 6.81%, the monthly payment was $2,527.
Mortgage rates have taken an unpredictable ride in the past year and a half, surging significantly from their lows during the pandemic. At the peak of the mortgage rates in the fall of 2022, they soared past 7%, reaching the highest point in two decades.
As per SFGate, although mortgage rates have slightly declined since then, it hasn’t been enough to persuade homeowners who locked in historically low mortgage rates in 2020 or 2021 to refinance into more costly loans. This trend showcases the hesitation among homeowners to trade their favorable mortgage terms for higher rates.
Federal Reserve to Remain 5% – 5.25% Interest Rate for Prospective Homebuyers
As inflation surged last year, mortgage rates followed suit. To tackle rising prices, the Federal Reserve responded by gradually increasing its federal funds rate, making borrowing more expensive and aiming to limit consumer spending.
CNET reported that after raising interest rates 10 times since March 2022, the Fed decided to pause at its June meeting, keeping the federal funds rate at 5.00% to r now. However, future rate hikes are not entirely ruled out, and the Fed will assess whether to raise rates further at its upcoming meeting on July 26.