Mortgage rates dropped this week after having climbed for three weeks, according to data Freddie Mac released on Thursday. The 30-year fixed-rate mortgage averaged 6.71% for the week ending June 8, down from 6.79% the week before, Freddie Mac reported. Compare that to a year ago, when the 30-year fixed rate was 5.23%. The average mortgage rate is based on mortgage applications Freddie Mac receives from thousands of lenders across the US, the GSE noted in explaining its methodology. The survey includes only borrowers who put 20% down and have excellent credit, according to the agency.
Mortgage rates fall after three-week climb was welcome news for mortgage brokers, and somewhat surprising. While welcome news given her role as a mortgage broker, Rebecca Richardson, of UMortgage, wasn’t completely taken off guard by the development. Still, she added, the lowered rates only added to the contradictory market reports amid today’s uncertain market.
“It was somewhat expected after the resolution of the debt ceiling standoff but also a bit surprising following positive job numbers,” she told Mortgage Professional America. “Extra ‘black swan’ margin was built into pricing in case it didn’t get resolved and I suspect traders are shedding some of that and positioning for next week’s Fed meeting.”
Republicans were pitted against Democrats over raising the debt ceiling on the nation’s $26 trillion economy, with the former threatening to vote against expanding the cap until concessions were made. Both parties came to an agreement last weekend, preventing what would have been the nation’s first default on its debts since it was formed – a scenario universally viewed as catastrophic should it have occurred. The jobs report to which Richardson referred came from the US Bureau of Labor Statistics, showing 339,000 jobs were created in May – far exceeding expectations by nearly double the anticipated amount. Mortgage rate drop gives buyers hope Notwithstanding the emergence of data seemingly in contradiction with each other against a backdrop of uncertainty, the dip in mortgage rates does have a buoying effect, Richardson said. “It puts some wind in the sails of buyers and helps abate their fears,” she said. “It also means it stokes demand in light of historically low inventory. It means we have a 2021 high demand market but with 2023 rates, which lower affordability. It’s a tough dynamic for buyers, for sure.”
Does she expect mortgage rates to continue falling?
“On the long range, yes,” she said. “Short term there’s volatility until we can get data supporting easing inflation that’s satisfactory to the Fed.”
By Tony Cantu
09 Jun 2023 READ THE FULL ARTICLE HERE