The latest data from Freddie Mac shows mortgage rates have increased for the third week in a row despite signs of a strong labor market and hints that the Fed may initiate another rate hike.
For the week ending June 1, the average monthly fixed-rate mortgage rate rose to 6.79%. That's up from last week's average of 6.57%. A year ago, it averaged 5.09%.
The average 15-year fixed-rate mortgage rate rose to 6.18% from last week, when it averaged 5.97% and last year, when it averaged 4.32%.
This week, mortgage rates rose as a buoyant economy has prompted the market to price-in the likelihood of another Federal Reserve rate hike, said Sam Khater, Freddie Mac's chief economist. Although prices have been steady in the low to mid six percent range, that demand is likely to weaken as rates approach seven percent. To find the best mortgage rates, it's helpful to shop around. With Credible, you can compare loan options from different lenders without affecting your credit score.
The latest Mortgage Bankers Association MBA data shows that the number of mortgage applications has decreased in response to an uncertain interest rate environment.
The MBA said mortgage applications decreased by 3.7% for the week ending May 26.
Inflation is still running too high, and recent economic data is beginning to convince investors that the Fed will not be cutting rates anytime soon, said Mike Fratantoni, MBA's SVP and chief economist.
Some experts have predicted lower mortgage rates in the near future, but some experts have forecasted lower rates in recent years. Sixty-three percent of experts polled by Zillow said they expected that the first quarter of 2023 would have the highest 30-year fixed mortgages, according to a report published in March.
The same panel also said home prices would fall through the rest of this year.
The majority of experts are now predicting an outright decline in U.S. home prices in 2023, Pulsenomics chief Terry Loebs said in a statement.
If you want to get the best mortgage rates, you can benefit from exploring your options. The Fed said it is possible that interest rate hikes will become more possable in the next few years.
Although the Fed has increased interest rates ten times since the beginning of 2022 to reduce inflation, the Fed said it is considering another hike for its upcoming meeting set for mid-June.
I do not support stopping rate hikes unless we get clear evidence that inflation is moving down towards our 2 percent objective, said Fed Governor Christopher J. Waller at an economic summit in Santa Barbara, California.
However, inflation has shown signs of slowing. The CPI, a measure of inflation, increased 4.9% year-over-year in April, a drop from its 5% bump in March and its 9.1% peak in June 2022.
Inflation is too high, and the clock is ticking before the Fed's next meeting, Morning Consult's Chief Economist John Leer said. After falling from 40-year highs, inflation appears to be settling in at an uncomfortably elevated level.
The Fed's rate hikes are back on the table at the June meeting, although ongoing stress in the banking sector may tighten financial conditions on their own, effectively tightening monetary policy without additional intervention from the Fed, Leer said.
If you're worried about potential rate increases, you can lock in a suitable mortgage rate today by shopping around and comparing your options. Go to Credible now to get your personalized rate in just a few minutes.
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