Mortgage rates were little moved this week, falling just 3 basis points after
The 30-year fixed rate loan averaged 6.46% as of Aug. 22, down from last week's 6.49%, the Freddie Mac Primary Mortgage Market Survey reported. A year ago,
The 15-year FRM also fell, moving to 5.62%, from 5.66% last week. For the same week in 2023, it averaged 6.55%.
"Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently
"Earlier this month, rates plunged and are now lingering just under 6.5%, which has not been enough to motivate potential homebuyers," Khater continued. "We expect rates likely will need to decline another percentage point to generate buyer demand."
This week's decline was more in line with trends in the 10-year Treasury yield. On Aug. 8, the yield was just shy of 4%, falling as much as 18 basis points in the following week before bouncing back up to 3.93% on Aug. 15.
A similar pattern happened this past week, with the yield closing on Aug. 21 at 3.78% before moving back up on Thursday morning to 3.86%.
Lender Price product and pricing engine data
The 30-year FRM as tracked by Zillow was at 6% on Wednesday before rising 2 basis points on Thursday morning. That is still 13 basis points lower than last week's average of 6.15%.
"Mortgage rates eased slightly this week as data revisions showed past employment growth was weaker than previously thought," said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a statement sent out Wednesday night. "The latest Bureau of Labor Statistics Current Employment Statistics showed a 30% downward revision to employment gains in the 12-month period through March," which is the largest revision since 2009.
The majority of Federal Reserve Board members (
That cut, however, is already baked into current mortgage rates, Divounguy said. So it likely would not result in major changes in the future.
Mortgage rates are at their lowest since early 2023, and a meaningful uptick in applications has taken place over the last couple of weeks, which real estate technology company Voxtur Analytics is seeing in its business, said David Sober, senior vice president of enterprise business development in a statement sent out Wednesday. With a September Federal Open Market Committee rate cut, that should continue through the rest of 2024.
"Lower rates combined with initiatives from Fannie Mae and Freddie Mac, such as the title waiver program and promotion of cheaper, alternative title and valuation solutions, should provide tangible relief to the consumer," Sober said. "For mortgage lenders, the downward shift in rates also makes it imperative to keep close watch on their servicing portfolios for recapture opportunities and to protect against the deterioration of mortgage servicing rights values."
What has been happening with rates in recent weeks has been incremental, but much needed, relief for lenders, said Rich Martin, senior vice president, retail lending, at data and analytics company Curinos.
The company's data year-over-year for purchase volume is only up a rather flat 1% for July. Rate-and-term refinancings are up 138% versus one year prior.
Cash-out refis, the month-to-month change from June was a gain of 18%; compared with July 2023, the gain was 4%, Martin said in a Wednesday interview.
Affecting profitability, however, is the still-wide spread between the 10-year Treasury yield and the 30-year FRM.
"We're still not in what I would call a normalized spread environment, but we are seeing some relief with that, increased volume, more volume, larger originations, can drive down some of those expenses on the production side," Martin said.
Plus, independent mortgage bankers have strung together
The markets have apparently moved off expectations, for now, of a 50 basis point rate cut in September, and are now looking at 25 basis point reduction, although the situation has been changing week-to-week, Martin noted.
Still, the view is the FOMC will cut rates between two and three times by the end of the year, he said.
Martin does have a level in mind that will get consumers back into the purchase market.
"A psychological level at about 6% is where you're going to get, from a mortgage demand perspective, you're going to get a lot of folks off the sidelines coming into the market," Martin said. But he doesn't expect rates to get that low until 2026.
His view is the 30-year FRM should hover around 6.2% next year. Meanwhile the supply of homes for sale also will remain constrained.
In the near term, "the Personal Consumption Expenditure data release next week will likely cause investors to reassess their growth forecasts and the path of Fed policy," Divounguy said. "While inflation is expected to keep moderating, any unexpected deviations from the current trajectory could trigger more mortgage rate volatility."
