Freddie Mac Mortgage Rates—June 20, 2024
What happened to mortgage rates this week
The Freddie Mac rate for a 30-year mortgage decreased by 0.08 percentage points to 6.87% this week. In the updated economic projections from the June FOMC meeting, the anticipated rate cuts by the end of 2024 have been scaled back from three to one, and to implement this single rate cut, significant progress is still needed before the Fed feels confident enough, as indicated by the strong May job growth and stubborn CPI data.
In the meantime, today’s homebuyers will continue to encounter relatively high borrowing costs, despite the potential benefits of lower inflation and mortgage rates. With the long-run Fed Funds rate projection also rising slightly, it’s important to recognize that mortgage rates are likely to remain well above the 3.5% to 5% range that prevailed in the decade before the pandemic.
What it means for the housing market
Following the May CPI report, ten-year yields have decreased, suggesting that mortgage rates may also ease further. However, rates still hover near 7% and have remained above 6% since September 2022. Consequently, many homeowners are opting to stay put, delaying the sale of their homes until mortgage rates decline. This has led to housing supply remaining well below pre-pandemic levels. Significant drops in mortgage rates are necessary to encourage more sellers to re-enter the market. Notably, as of the end of 2023, over 50% of outstanding mortgages have rates at 4% or lower, and 87% have rates at 6% or lower. While it’s unlikely for mortgage rates to fall below 4%, a rate around 6% could strongly motivate many sellers to list their homes, thereby increasing overall inventory and exert downward pressure on housing prices.