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Mortgage rates continued on their downward trajectory on Thursday, slipping to a five-week low, as the markets reacted to fresh comments from Federal Reserve Chair Jerome Powell and the latest Consumer Confidence Index data.
The average rate on 30-year fixed home loans decreased to 6.77% for the week ending June 26, down from 6.81% last week, according to Freddie Mac. Rates averaged 6.86% during the same period in 2024.
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“Borrowers should find comfort in the stability of mortgage rates, which have only fluctuated within a narrow 15-basis point range since mid-April,” says Sam Khater, Freddie Mac’s chief economist. “Although recent data show that home sales remain low, the resulting available inventory provides
homebuyers with a wider range of options to consider when entering the market.”
In his June 24 testimony before the House Financial Services Committee, Powell reiterated the “wait-and-see” stance on interest rate cuts outlined during the latest Federal Open Market Committee (FOMC) meeting last week, signaling caution amid mixed economic indicators.
Powell faced tough questioning from both Republicans and Democrats over the central bank’s decision to keep rates steady in the 4.25%-4.5% range, even as President Donald Trump continued threatening to fire the chair.
“While recent employment and inflation figures suggest a gradual cooling, consistent with the Fed’s goals, newly imposed tariffs have introduced fresh upside risks to inflation,” says Realtor.com® Senior Economic Research Analyst Hannah Jones.
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Meanwhile, the Consumer Confidence Index unexpectedly dropped in June, with surveyed households expressing concern over both current business and labor market conditions, as well as anxiety over the economic outlook.
Additionally, fewer respondents than before indicated they planned to purchase a home, suggesting that homebuyers may be hesitant to make a large financial commitment.
“Stuck in a bit of a rut, the housing market continues to suffer from high home prices and elevated mortgage rates,” says Jones.
As a result of the current economic conditions, nearly every large U.S. metro is unaffordable to median-earning households. Only Pittsburgh, St. Louis, and Detroit, were affordable to households earning the local median wage in May.
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“However, climbing for-sale inventory in much of the U.S. could help soften upward price pressure and usher in a more friendly housing market for buyers,” predicts the analyst.
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How mortgage rates are calculated
Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.
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So when the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to go up. Conversely, when Treasury yields decrease, mortgage rates fall.
The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account. Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.
Mortgage applications dipped by 2% from a week ago, according to the latest data from the Mortgage Bankers Association’s Weekly Mortgage Application survey ending on March 21.
During the same period, purchase applications, involving the offer and agreement to buy a property, increased 1% from a week ago and 7% year over year, driven by a surge in FHA loan applications, according to Joel Kan, MBA’s vice president and deputy chief economist.
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How your credit score affects your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you’ll receive. The higher the credit score, the lower the interest rate you’ll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a “fair” rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
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Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. They want to make sure you’re able to pay back the loan.
The post Mortgage Interest Rates Today: Mortgage Rates Retreat Again After Fed Chair’s Congressional Testimony appeared first on Real Estate News & Insights | realtor.com®.