Mortgage rates may or may not continue to decrease later this year, depending on the Fed
US mortgage rates dropped two basis points after the Federal Reserve opted not to hike rates for the first time since March 2022.
Freddie Mac reported Thursday that the 30-year fixed-rate loan averaged 6.69%, down from 6.71% last week. The 15-year fixed mortgage, on the other hand, climbed three basis points week over week to 6.10%.
“Mortgage rates decreased slightly this week in anticipation of the pause in rate hikes by the Federal Reserve,” said Freddie Mac chief economist Sam Khater. “As inflation continues to decelerate, economic growth is slowing, and the tightening cycle of monetary policy is reaching its apex, which means mortgage rates are expected to decrease later this year and into next.”
That is if the Fed continues to hold off on additional rate hikes, according to Mortgage Bankers Association chief economist Mike Fratantoni.
“The new set of economic projections shows that the median FOMC member expects two additional hikes by the end of 2023,” Fratantoni said. “Unfortunately, this only adds to the chances that the economy will slow sharply. Given the banking challenges that have already resulted in a tight credit environment, the threat of further hikes, baked into medium-term rates today, will only further slow economic activity. We expect that economic conditions will develop in such a way that further hikes are not needed, but this new information impacts markets immediately.
Read more: Federal Reserve interest rate pause – brokers react
“Mortgage rates have generally increased in the past month, and this has slowed the pace of housing market activity, as potential homebuyers have been very sensitive to any changes in rates this year. We expect that mortgage rates will drift down over the second half of the year as the economy slows and the Fed reacts accordingly by holding off on further rate hikes.”
Find out the current mortgage rates in the USA as they stand right now.
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