Decreasing mortgage rates continue

The average long-term mortgage rate in the US fell slightly this week to 6.69%, according to Freddie Mac's weekly data. Despite the decrease, rates remain high compared to earlier in the spring homebuying season. The rate on the 30-year fixed mortgage fell from 6.71% last week. One year ago, it averaged 5.78%. The Chief Economist at Freddie Mac, Sam Khater, suggested that the recent decrease in rates is due to the pause in rate hikes by the Federal Reserve. He also predicted that as inflation continues to decelerate, economic growth is slowing, and the tightening cycle of monetary policy is reaching its apex, mortgage rates are expected to decrease later this year and into next. However, the Fed indicated it will raise rates two more times this year, increasing the cost of borrowing and quashing any optimism that a terminal rate had been reached. The Fed rate hiking cycle has been an attempt to slow the economy by reducing the velocity of money. However, the announcement of future interest rate hikes by Jerome Powell came as a blow to homebuyers who will continue to fight an uphill battle in the coming months. Despite spring and summer being the peak home buying season, home sales have been far below historical figures as the market remains tight.