Mortgage Rates Drop Below 7%

Calling it an “unexpected windfall” of both lower rates and increased inventory of new and existing homes, Freddie Mac’s data showed the 30-year fixed-rate mortgage (FRM) averaging 6.94% this week, down from 7.02% last week and marking its third-straight week of declines.

The data is tracked weekly in Freddie Mac’s Primary Mortgage Market Survey® (PMMS®), released every Thursday.

This week’s numbers:

The 30-year FRM averaged 6.94% as of May 23, 2024, down from last week when it averaged 7.02%. A year ago at this time, the 30-year FRM averaged 6.57%.
The 15-year FRM averaged 6.24%, down from last week when it averaged 6.28%. A year ago at this time, the 15-year FRM averaged 5.97%.

What the experts think:

“Spring homebuyers received an unexpected windfall this week, as mortgage rates fell below the seven percent threshold for the first time in over a month,” said Sam Khater, Freddie Mac’s chief economist. “Although this week’s data on previously owned home sales showed a decline, total inventory of both new and existing homes is up. Greater supply coupled with the recent downward trend in rates is an encouraging sign for the housing market.”

Realtor.com Economist, JIayi Xu, commented, “The Freddie Mac fixed rate for a 30-year mortgage dropped by 0.08 percentage points to 6.94% this week. Meanwhile, the 10-year treasury yields dropped to 4.3% following the release of April’s CPI data before stabilizing around 4.4% this week. The progress in inflation and labor market observed in April data will likely provide some stability in mortgage rates and may even lead to some additional declines. While the market felt encouraged by the improvement, the Fed officials were not convinced by the sparks and reiterated that more good data is needed for the confidence to cut rates. An interesting question is whether that level of confidence could be reached by the June FOMC meeting, with one more CPI reading by then. We expect that this confidence-building process will take longer, positioning the Fed for an adjustment in late summer or early fall, which could then subsequently impact mortgage rates.

“As mortgage rates have stopped climbing, buyers and sellers are eagerly anticipating lower mortgage rates to reignite the housing market. However, for rates to fall further below 7%, there must be consistent evidence that inflation is on track to return to 2%. Recent research by Realtor.com® and the National Association of REALTORS® indicates that buyers in Spokane-Spokane Valley, WA, Lakeland-Winter Haven, FL, Salt Lake City, UT, Deltona-Daytona Beach-Ormond Beach, FL, and Fresno, CA, will see the most significant affordability improvements with lower mortgage rates. However, even with reduced rates, the market still faces a shortage of affordable listings. In a balanced market, buyers with an income of $125,000 should be able to afford 72% of the listings. Yet, at a 6% mortgage rate, these buyers can only afford 55% of today’s available listings.”