The 30-year fixed-rate mortgage (FRM) averaged 6.90% this week, up for the second week in a row from last week’s 6.81%, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.90% as of August 3, 2023, up from last week when it averaged 6.81%. A year ago at this time, the 30-year FRM averaged 4.99%.
- 15-year fixed-rate mortgage averaged 6.25%, up from last week when it averaged 6.11%. A year ago at this time, the 15-year FRM averaged 4.26%.
What the experts are saying:
“The combination of upbeat economic data and the U.S. government credit rating downgrade caused mortgage rates to rise this week,” said Sam Khater, Freddie Mac’s chief economist. “Despite higher rates and lower purchase demand, home prices have increased due to very low unsold inventory.”
Realtor.com Economic Data Analyst Hannah Jones commented:
“The Freddie Mac fixed rate for a 30-year mortgage continued to inch towards 7% this week, reaching 6.9% as 10-year treasury yields climbed past the 4% threshold. On Wednesday, the U.S. Treasury announced it would sell off more than $100 billion of long-term securities, driving 10-year treasury yields to the highest level since November 2022. This development, along with upcoming employment and inflation data, will determine how much mortgage rates may rise in the short term. Should employment and inflation pick up steam, mortgage rates are likely to continue climbing as markets anticipate further monetary tightening.
“Today’s housing market is grappling with low for-sale inventory amid sustained, though historically low, buyer demand. Active inventory fell compared to the previous year in July as many homeowners held off on listing their home for sale, largely in response to today’s high mortgage rates. The drop in for-sale inventory was met with the typical seasonal pick-up in buyer demand, despite affordability constraints, which propped up home prices. In the second quarter of 2023, homeowner vacancy fell to a historical low of 0.7% as many homeowners stayed put and home shoppers snapped up available inventory, leaving fewer homes vacant. The housing market continues to face more than a decade of underbuilding, and the resulting gap in home supply is being exacerbated by the lower level of existing homes for sale.
“Last week, the FOMC raised the federal funds rate by the expected 25 basis points. The committee’s statement emphasized that incoming economic data will guide future rate hike choices. Home buyers continue to feel the effects of tighter policy, which keeps a floor under mortgage rates. Still-high home prices and elevated mortgage rates have eaten into purchasing power for many buyers, leading to both fewer home sales and fewer listings. However, many markets, especially more affordable locales, continue to see high demand and rapid price growth as home shoppers flock to areas, such as those featured in the Summer’s Emerging Housing Markets, where homeownership is still within reach,” Jones concluded.
