Mortgage rates dropped lower after weeks of climbing to stay but remained above 6.5%, according to Freddie Mac.
The average rate for a 30-year fixed-rate mortgage dropped to 6.71% for the week ending June 8, according to Freddie Mac's Primary Mortgage Market Survey. That's down from last week when it averaged 6.79%. Mortgage rates remained above last year when the average was 5.23%.
The average rate for a 15-year mortgage was 6.07%, down from 6.18% last week and up from 4.38% last year.
After weeks of seeing rates climb, the break should come as welcome news for buyers in the market this spring home buying season. However, a lack of housing supply is driving competition and prices up in the market, creating additional affordability issues for buyers, according to Freddie Mac Chief Economist Sam Khater.
"Mortgage rates decreased after a three-week climb," Khater said. "While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective homebuyers."
If you are looking to buy a home, you can take advantage of lower mortgage rates and shop for the best rate on a loan. Visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.
THESE TWO FACTORS COULD BE DRIVING YOUR CAR INSURANCE COSTS UP
The Federal Reserve meets next week to discuss interest rates. The central bank has already raised rates 10 times in 2022 and 2023 in a bid to bring inflation down to a 2% target, raising rates by another 25 basis points at its most recent May meeting. The rate hike brings the federal funds rate to a targeted range of 5% to 5.25%, the highest level in 16 years. While interest rate moves don't directly impact mortgage rates, they are highly influenced.
It was largely anticipated that the Fed would pause increases at the June meeting following more moderate inflation figures reported in April. Nonetheless, the Bureau of Labor Statistics' strong jobs report posted in May doesn't support that the Fed's tighter monetary policy is moving the needle on inflation.
"While the bill to resolve the debt ceiling standoff offered a noticeable relief to capital markets, concerns linger over the Fed's next rate decision," Keeping Current Matters Chief Economist George Ratiu said in a statement. "Several leading members of the central bank have voiced support for a rate pause this month, giving some investors hope that rate hikes may be over.
"However, with inflation still running near 5%, the bank's rate-setting committee remains focused on taming price growth toward its 2% target and is not likely to back away from the task," Ratiu continued. "Even with a June pause, additional rate hikes are on the table for the second half of 2023."
If you're trying to find the best mortgage rate, it can help to shop around. Visit the Credible marketplace to compare options from different lenders at once without affecting your credit score.
MORE STUDENTS TURNING TO FEDERAL AND PRIVATE STUDENT LOANS TO FINANCE COLLEGE: SURVEY
Buyers may also find another obstacle in their homeownership dream: tight credit availability, according to Ratiu. The Mortgage Bankers Association's (MBA) Mortgage Credit Availability Index (MCAI) dropped to the lowest level in a decade, the latest report showed.
The MCAI fell by 0.9% to 99.6 in April. A decline in the MCAI indicates that lending standards are tightening, while increases in the index indicate loosening credit.
"Homebuyers continue to look for their first or next home and are adjusting to market conditions," Ratiu said. "At the same time, many are finding tight credit availability conditions.
"The MBA's Mortgage Credit Availability Index dropped to the lowest level since the start of 2013, as many banks and lenders are shoring up their balance sheets and remain concerned about taking on additional risk," Ratiu continued. "Meanwhile, homebuyers' financial health has never been stronger, with the median FICO score at 765 for mortgage borrowers in the first quarter of this year."
If you are ready to shop for a mortgage, you could get a better rate by looking at several lenders. Visit Credible to help you compare interest rates from multiple mortgage lenders and choose the one with the best rate for you.
HOMEBUYERS ARE FINDING BETTER DEALS IN THESE CITIES, SURVEY SAYS
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.
