Mortgage rates continue to decline despite inflation concerns

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Markets agree that inflation is temporary, economist Freddie Mac said.

Mortgage rates continue to decline despite concerns that the Federal Reserve will eventually have to take action to fight inflation, with rates on 30-year fixed-rate mortgages continuing to fall below 3 percent.

Sam Hater | Photo: Freddie Mac

“Mortgage rates continue to decline as markets agree that inflation is only temporary,” said Freddie Mac chief economist Sam Hather. statement… “Despite low mortgage rates, consumer demand has declined over the past couple of months, primarily due to affordability constraints associated with high house prices. With inventory shortages, slowing demand has not yet affected prices, which means the sales market is likely to remain strong in the summer. ”

For the week ending June 17, Freddie Mac’s Weekly Mortgage Market Survey revealed average rates for the following loan types:

  • For 30 year fixed rate mortgage, rates averaged 2.93 percent with an average of 0.7 points, up from 2.96 percent last week and 3.13 percent a year ago. Interest rates on 30-year loans hit a record low of 2.65 percent as of 1971 for the week ending January 7, 2021.
  • Betting on Mortgage with a fixed interest rate for 15 years an average of 2.24 percent with an average of 0.6 points, up slightly from 2.23 percent last week but below 2.58 percent a year ago. The historic low for 15-year fixed rate mortgages in records dating back to 1991 was also observed during the week ended January 7, 2021, when rates averaged 2.16 percent.
  • For 5 Year Adjustable Rate Hybrid Mortgage Indexed by Treasury (ARM) loan rates averaged 2.52 percent with an average of 0.3 points, up from 2.55 percent last week and 3.09 percent a year ago. ARM’s 5-year loan rates hit a record low of 2.56 percent for the week ending May 2, 2013, according to Freddie Mac’s 2005 records.

A source: Freddie Mac’s Initial Mortgage Market Research

The Freddie Mac study tracks conventional, eligible home loans for borrowers who have invested 20 percent and have excellent creditworthiness. Borrowers with larger loans, lower down payments or lower credit ratings can expect higher rates.

Mortgage rates rose in February and March on fears that the Fed would soon be forced to take action to counter inflation. The consumer price index rose 5.0 percent in May over last year, the largest annual increase since August 2008.

Fed policymakers this week confirmed their commitment continue to buy $ 80 billion in long-term Treasury bonds and $ 40 billion in mortgage-backed securities every month “until significant further progress is made” towards the Fed’s employment and price stability goals. These purchases help keep mortgages and other long-term interest rates low.

In a statement, members of the Federal Open Market Committee acknowledged concerns about inflation, but described them as temporary. For now, the Fed is willing to allow inflation to rise “moderately above 2 percent for some time” as long as long-term expectations remain “well anchored” at 2 percent.

However, in forecast released this weekFannie Mae economists warned that rents and house prices are an important component of inflation and that rising house prices could push inflation out of the Fed’s comfort zone.

Fannie Mae economists cut their second and third quarter home sales outlook, citing a lack of listings and restrictions on home builders that are driving home sales and driving up house prices and rents.

Email Matt Carter



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