Mortgage rates slip back as inflation slows

But homebuyers looking to take advantage of declining rates have other barriers to face

Mortgage rates slip back as inflation slows

Long-term US mortgage rates have fallen 18 basis points, giving homebuyers some relief in the volatile housing market.

The 30-year fixed-rate mortgage was down to 6.78% from 6.96% last week, Freddie Mac’s latest Primary Mortgage Market Survey showed. The 15-year fixed-rate loan also posted a significant week-over-week decrease, down 24 basis points to 6.06%.

“As inflation slows, mortgage rates decreased this week,” said Freddie Mac chief economist Sam Khater. “Still, the ongoing shortage of previously owned homes for sale has been a detriment to homebuyers looking to take advantage of declining rates. On the other hand, homebuilders have an edge in today’s market, and incoming data shows that homebuilder sentiment continues to rise.”

Odeta Kushi, deputy chief economist at First American, agreed, saying that builders are benefitting from the lack of resale inventory, but higher mortgage rates still pose a threat. According to the National Association of REALTORS, the inventory of unsold existing homes remained unchanged at 1.08 million in June, or equivalent of 3.1 months’ supply at the current sales pace.

“Reduced affordability alongside ongoing supply-side challenges and tighter lending standards for acquisition, development and construction (AD&C) loans could throttle builder momentum,” Kushi said.

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