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Mortgage Rates Tumble – But Still Linger Over 7% | Mortgages and Advice


Mortgage rates declined this week, with the average 30-year rate falling 13 basis points to 7.11%. Fixed rates dipped lower across the board, while adjustable mortgage rates ticked slightly higher.

Here are the current mortgage rates, without discount points unless otherwise noted, as of June 8:

Mortgage Rates Tumble – But Still Linger Over 7% | Mortgages and Advice
  • 30-year fixed: 7.11% (down from 7.24% a week ago).
  • 20-year fixed: 7.06% (down from 7.08% a week ago).
  • 15-year fixed: 6.55% (down from 6.63% a week ago).
  • 10-year fixed: 6.63% (down from 6.74% a week ago).
  • 5/1 ARM: 6.02% (up from 5.99% a week ago).
  • 7/1 ARM: 6.19% (up from 6.16% a week ago).
  • 10/1 ARM: 6.38% (up from 6.31% a week ago).
  • 30-year jumbo loans: 7.16% (down from 7.27% a week ago).
  • 30-year FHA loans: 6.34% with 0.06 point (down from 6.55% a week ago).
  • VA purchase loans: 6.58% with 0.05 point (down from 6.66% a week ago).

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“While the bill to resolve the debt ceiling standoff offered a noticeable relief to capital markets, concerns linger over the Fed’s next rate decision. … Even with a June pause, additional rate hikes are on the table for the second half of 2023.”


– George Ratiu, chief economist at Keeping Current Matters

With worry over a potential U.S. government debt default finally in the rearview mirror, mortgage forecasters can return to the slightly less interesting indicators we’ve become accustomed to, like inflation and employment. Federal Reserve policymakers are keeping a close eye on economic conditions to guide their rate decision at their next meeting on June 13-14.

Fed officials have discussed the possibility of “skipping” a rate hike – a small but meaningful difference from “pausing” the rate hike cycle, according to economist Jiayi Xu. Reading between the lines, this means that another rate increase is possible in the coming months.

“While the potential for another rate hike raises the prospect of increased mortgage rates, the objective of curbing inflation will ultimately lead to a decline in mortgage rates, bringing much-desired stability to the market,” Xu says.

Skipping a June rate hike would allow the Fed to wait for more economic data to be released after May’s mixed employment report, which showed that the U.S. added more jobs than expected while the unemployment rate rose to the highest level in nearly two years. For now, all eyes are on the May inflation report to be released on June 13.

Indicator of the Week: Why It Feels Like a Bad Time to Buy

With 7% mortgage rates, depleted inventory and unyielding home prices, it should come as no surprise that prospective homebuyers are becoming increasingly frustrated with the state of the housing market. But the actual figures are still staggering: 80% of Americans say it’s a bad time to buy a home, according to the May Home Purchase Sentiment Index from Fannie Mae.

Of concern, the majority of consumers don’t expect affordability to improve any time soon. Even with the seemingly impossible price appreciation seen over the past several years, 72% of respondents say that high home prices are here to stay, 39% say they’ll continue rising over the next 12 months, and 33% say prices will stay the same. Plus, half of Americans believe mortgage rates will rise further in the coming year.

The widespread pessimism around the U.S. housing market may be justified. The supply of homes for sale is lagging this spring with homeowners reluctant to sell and trade in a much lower mortgage rate. Paired with a seasonal return of buyer demand, home prices rose by 1.3% in March in spite of high rates. Let’s put the affordability crisis into a more tangible perspective:

  • Average mortgage payments have increased by almost $600 per month since January 2022, when rates were in the low 3% range, per the Mortgage Bankers Association.
  • Middle-income buyers can afford 23% of listings on the market, compared with 50% of listings five years ago, according to a new report from the National Association of Realtors and
  • Just 24% of new construction homes sold for less than $300,000 in 2021, down from 42% in 2018, Census Bureau data shows.

And yet, there may still be good reason to buy a home now. Every small drop in mortgage rates brings a new wave of homebuyers to the market who had been previously waiting on the sidelines. If rates fall to around 5.5% by the end of the year, as forecasts indicate, increased demand could potentially drive up home prices even further, essentially erasing any affordability gains granted by lower mortgage rates.

That’s why Barbara Corcoran, the real estate mogul who’s known for her role as an investor on ABC’s “Shark Tank,” goes against the grain in saying that now is actually “a good time to buy” a home. In a recent interview on ABC’s “Good Morning America,” Corcoran told viewers that when mortgage rates drop, “prices are going to explode, and you’re going to be paying more for the same house.”

Corcoran echoes the sentiments of many real estate agents (who are happy to close the sale) when saying “you can always refinance” down the line when rates drop. But since the crystal ball that helps us forecast mortgage rates has failed us before, it’s important to make sure you can afford your housing payments as they would be now – without hinging on refinancing.

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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