Yields are inching lower, but familiar challenges persist for hopeful homebuyers
Mortgage rates tumbled to their lowest level for seven week last Thursday – and there were further positive signs for the market at the beginning of this week as Treasury yields edged lower again.
Freddie Mac said the average 30-year fixed-rate mortgage ticked down to 6.43%v for the week ending July 2, and early on Monday morning the 10-year Treasury yield – a key driver of those rates – slipped by more than a basis point as investors awaited this week’s release of the latest FOMC minutes.
That summary of the Federal Reserve’s deliberations on its most recent interest rate announcement could provide some key clues on how individual decisionmakers are weighing up the inflation picture looking ahead, and whether the central bank is more likely to cut or increase rates in the coming months.
Other important economic updates will arrive later in the week in the form of weekly initial jobless claims data and the latest existing home sales figures for June. Both of those releases are scheduled for Thursday.
Last week, Freddie Mac chief economist Sam Khater said the latest decline in 30-year mortgage rates offered an “encouraging sign” ahead of a possible heating-up in housing market activity.
Still, while some of the unease that’s gripped the market since the outbreak of the Iran war in late February has eased in recent weeks, there are still plenty of potential storm clouds on the horizon.
Last week, new data showed the US labor market performed well below expectations in June, adding just 57,000 jobs last month – compared with economist predictions of 115,000 – even as the unemployment rate moved lower.
Meanwhile, protracted negotiations could be ahead on the future of the US-Canada-Mexico Agreement (USMCA), which the Trump administration opted not to extend before its deadline at the beginning of July.
That agreement has been crucial in mitigating the shock of US tariffs on its North American trading partners over the past 18 months, but US ambassador to Canada Pete Hoekstra indicated on Friday there’s no sign of a deal in store to replace or renew the document.
While hopeful homebuyers have seen some rate relief in recent weeks, affordability remains an enormous housing market hurdle across the country.
A mere 38% of non-homeowner households in the US can afford an average $200,000 starter home, according to a new LendingTree report – with the median non-homeowner household short more than $7,000 of annual income required to purchase one of those properties.
Mortgage applications have remained largely flat against that backdrop, with the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey revealing applications crept 0.04% higher in the week ending June 26.
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