Mortgage rates fell below 7% last week for the first time since March — leading to an uptick in the number of applications for loans from would-be home buyers.
The rate for a 30-year fixed mortgage fell from 7.02% to 6.94% for the week that ended June 14, according to Mortgage Bankers Association data released on Wednesday.
The five-year adjustable-rate mortgage fell to 6.27% from 6.45% — the lowest level since February, according to the data, which was first reported by Bloomberg News and MarketWatch..
There was also an increase in the number of mortgage applications for home purchases in the seven-day period that ended on Friday.
The market index rose 0.9% to 210.4 for the week ending June 14 from a week before. A year ago, the index stood at 209.8.
“Purchase applications increased a small amount for the week, led by applications for conventional loans,” Mike Fratantoni, MBA chief economist, said in a statement.
Though “purchase volume is still more than 10% behind last year’s pace,” he added, the “MBA is forecasting a pickup in home sales for the remainder of the year as more inventory is hitting the market.”
The decline in mortgage rates is seen as a sign that the Federal Reserve is more likely to cut interest rates sometime this year.
Investors are banking on at least one rate cut.
Last week, Fed officials said that while inflation has crept closer to their 2% target, they still expect to cut their benchmark interest rate just once this year — possibly as late as December.
The policymakers’ forecast for one rate cut was down from their previous projection of three cuts.
Inflation has remained stubbornly high, forcing the Fed to keep the benchmark rate between 5.25% and 5.50% — the highest in 23 years.
The benchmark rate has remained at that level since July of last year, after the Fed raised it 11 times to try to slow borrowing and cool inflation.
High mortgage rates and rising prices continued to put a damper on the spring home-buying season.
Existing home sales fell 1.9% to a seasonally adjusted annual rate of 4.14 million in April from a revised 4.22 million in March, the National Association of Realtors reported.
Sales dropped across the country — down 4% in the Northeast, 2.6% in the West, 1.6% in the South and 1% in the Midwest.
The median price of previously occupied homes rose 5.7% to $407,600 — the tenth straight increase and a record for April.
Lawrence Yun, the association’s chief economist, called the sales drop “a little frustrating.’’ Economists had expected sales to come in at 4.2 million.
Figures for May have yet to be reported.
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