Press Release: Mortgage Rates on the Rise as Economic Uncertainty Looms
Date: June 2024
Mortgage rates are expected to continue their upward trend in June, marking an unstable journey that began after the announcement of higher tariffs in April. The 30-year fixed-rate mortgage has sustained levels above 6.75% since mid-April, straining buyer affordability nationwide. While home prices have risen more slowly than last year, some markets, particularly in Texas and Florida, are witnessing declines.
Joseph Brusuelas, chief economist at RSM US, notes that broader economic factors are driving long-term interest rates, including mortgage rates, higher. He highlights the growing gap between yields on 30-year and 10-year Treasury bonds, suggesting accelerated economic growth and persistent inflation could prompt higher rates from the Federal Reserve.
Forecasts from major financial institutions indicate varying predictions for mortgage rates. Fannie Mae anticipates an average of 6.5% from April through June, while the Mortgage Bankers Association predicts 6.7%. Both forecasts hinge on a significant decline in rates for June, given that they averaged 6.8% in April and May.
Federal Reserve Chair Jerome Powell emphasized uncertainty in recent remarks, suggesting the Fed is in a holding pattern as it assesses potential recession risks stemming from tariff-induced inflation. The Fed’s monetary policy committee is set to meet on June 17-18, with expectations that short-term rates will remain unchanged.
Home prices have seen a modest increase of 4% year-over-year, a slowdown compared to previous trends. Notably, regions like Newark, NJ, experienced dramatic appreciation, while areas in Florida, particularly Lakeland-Winter Haven, faced notable price drops.
The combination of high mortgage rates, diminished buyer demand, and a persistent shortage of homes on the market continues to shape the housing landscape. As homes remain unsold, we may observe more sellers reevaluating their asking prices.
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