Mortgage Rates Continue To Tick Down In Mid-July: 'The Economy Remains Resilient'

Mortgage rates continued to trickle down this month, falling to 6.77%. The housing market continues its long-term movement to equilibrium, albeit slowly, as housing remains unaffordable for many Americans.

The Data: According to a Freddie Mac report, the average 30-year fixed mortgage rate fell to 6.77% in the week ending July 17.

This is lower than the 6.89% reading from the week ending July 11. It was 6.78% a year ago. The 30-year rates hit a relative peak of 7.79% in 2023.

Sam Khater, Freddie Mac’s chief economist, outlined Thursday’s report and its implications on the housing market.

"Mortgage rates are headed in the right direction and the economy remains resilient, two positive incremental signs for the housing market. However, homebuyers have yet to respond to lower rates, as purchase application demand is still roughly 5 percent below Spring when rates were approximately the same,” Khater said.

“This is not uncommon: sometimes as rates decline, demand weakens, and the apparent paradox is driven by buyers making sure rates don't decline further before they decide to purchase," Khater added.

A Redfin report from Thursday which quoted Chen Zhao, the company’s economic research lead, offered a note about interest rate expectations’ impact on mortgage rates.

“Now that it's looking increasingly likely the Fed will cut interest rates by the end of the year, some house hunters believe mortgage rates will fall more and are waiting for that to happen before they buy," Zhao said.

"But they may be waiting in vain; it's unlikely mortgage rates will drop much lower in the next few months, as markets are already pricing in the expectation of a rate cut in September, followed by several more at the end of 2024 and into 2025,” Zhao added.

According to CME FedWatch, investors are pricing in two to three Federal Reserve rate cuts by the end of 2024. There is a 98% chance of a September rate cut, as CPI data shows continued signs of inflation cooling.

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• US Needs 1.5 Million More Homes To Tame Record Prices

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