Mortgage Rates Drop Below 7% as Economic Uncertainty Eases
Bond market jitters have subsided regarding President Trump's economic agenda, leading to a decline in mortgage rates. As of Wednesday, the average 30-year fixed-rate mortgage rate had fallen to 6.96%, down from 7.04% the previous week. The average 15-year mortgage rate also decreased, moving from 6.27% to 6.16%.
"This is welcome news for potential homebuyers," stated Freddie Mac's chief economist, Sam Khater. "Despite ongoing affordability challenges, we're seeing an uptick in purchase applications, indicating a renewed interest in homeownership."
The drop in rates coincides with Trump's recent executive orders aimed at stimulating the economy. However, it remains unclear whether tariffs on imported goods will ultimately materialize. In a forecast released by Fannie Mae, mortgage rates are expected to remain elevated throughout the year, ending at 6.5% compared to the current 6.2%.
The higher rates continue to hamper home sales, keeping them at or near a 30-year low for the third consecutive year. Buyers face affordability challenges, while sellers remain hesitant to list their homes due to their existing low mortgage rates, a phenomenon known as the "lock-in effect."
"The lock-in effect may be more persistent than we initially anticipated," noted Fannie Mae's senior vice president and chief economist, Mark Palim.