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The 30-year fixed-rate mortgage was at an average of 6.99% for June 6, down from 7.03% one week prior, the Freddie Mac Primary Mortgage Market survey found. For
Rates on the 15-year FRM also fell to 6.29% from 6.36% week-to-week, but was up from 6.07% one year ago.
"Rates are just shy of 7%, and
Data from Lender Price posted on the National Mortgage News website at 11:30 a.m. Eastern Time on Thursday had the 30-year FRM averaging 6.959%. This compared with 7.275% one week ago.
Meanwhile, rates fell by 23 basis points on the 30-year FRM as tracked by Zillow. As of 11:30 a.m. eastern time on Thursday morning, they were down to 6.58% from an average of 6.81% for the prior week.
This erased the 30 basis point rise that took place in late May.
"Personal consumption data last week suggested consumer spending is slowing down," Orphe Divounguy, senior economist at Zillow Home Loans, said in a Wednesday evening statement. "At the same time, manufacturing activity pulled back after a brief rebound last month."
The job openings data from this week suggested considerable loosening in the U.S. labor market. Taken together, all are signs that the economy is cooling and the pace of inflation could slow.
"While investors expect that further disinflation will lead to Fed rate cuts later this year, a stronger than expected increase in hourly earnings in the May jobs report could cause some repricing activity," Divounguy said.
In a recent meeting with the editorial staff at National Mortgage News, Fannie Mae Chief Economist Doug Duncan said he expects two rate cuts from the Federal Reserve this year, one in September and the other in December. That puts Fannie Mae's estimate for where rates will end the year in the 7% range.
When Federal Reserve chairman Jerome Powell says higher for longer, the market has two ways to interpret that statement, he said.
"One is they will keep the current Fed funds target where it is for a long time period," said Duncan. "The other one is when they do decide to ease, is they might ease more gradually and less far than you would have expected."
Fannie Mae's economists are in both camps, he added.
The 10-year Treasury yield, one of the influences on mortgage pricing, was at 4.29% at 11:30 a.m. Eastern Time, down from a close of 4.55% one week earlier. This is the lowest the 10-year has been since April 1.
Another component on mortgage pricing is the primary market-secondary market spreads, the difference between the rate on a loan and what a securitization is being priced at.
Those spreads widened in late April as publicly traded mortgage lenders reported earnings, but are now back down to being roughly flat compared with the first quarter, said Bose George, an analyst with Keefe, Bruyette & Woods, in a flash note.
"The April widening appeared to be driven by higher rates, which have also largely come back down," George said.
Agency mortgage-backed securities appear to be trading in a tighter spread range compared with the 10-year Treasury swap rate; that range is 170-to-200 basis points in 2024, while in the second half of last year, the upper end was 220 basis points.
"The main driver of the narrower range appears to be market expectations that the Fed will not raise rates," George said.
Another influence on this is what the banks are doing, especially given
"Bank holdings of agency MBS have grown moderately from the lows in October and banks are no longer a technical negative," George said. "While Fed holdings of agency MBS continue to run down, the pace has been muted, reflecting slow prepayments."
