Mortgage rates rise for first time in four weeks

Mortgage rates moved up slightly this week, ending a streak of three consecutive declines, but remaining in the same general range over the entire time frame, Freddie Mac said.

Its Primary Mortgage Market Survey for June 29 found the 30-year fixed-rate loan averaging 6.71%, a gain of four basis points from the prior seven days' 6.67%. It was a full percentage point higher than the same week one year ago, when it was 5.7%.

The 15-year FRM rose three basis points week-to-week, to 6.06% from 6.03%. For this same week in 2022, the 15-year FRM was 4.83%.

"Mortgage rates have hovered in the six to seven percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year," said Sam Khater, Freddie Mac chief economist, in a press release.

The Mortgage Bankers Association's Builder Application Survey rose in May by 8% from the prior month and 16.6% year-over-year.

"New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction," Khater continued. "The improved demand has led to a firming of prices, which have now increased for several months in a row."

Rates on the 30-year FRM according to Zillow's rate tracker rose early in the week before settling back down on Wednesday at the same as the previous week's average of 5.44%.

Economic data is providing mixed signals when it comes to inflation and the overall outlook, said Orphe Divounguy, senior macroeconomist at Zillow Home Loans, in a Wednesday afternoon statement.

"Data released this week suggested that residential investment may have already bottomed, dampening any perceived risks of a recession, at least in the near-term," Divounguy said. That said, myriad risks do remain, not least a credit crunch stemming from turmoil in the banking industry earlier this year."

Divounguy pointed to conflicting statements from Federal Reserve members, with Chairman Jerome Powell on the record for two or more increases in short-term rates. "Other leaders including Atlanta Fed President Raphael Bostic favor a longer Fed pause, noting that the previous hikes should continue to work their way through the economy and pull core inflation closer to the Fed's target. This push-and-pull of economic data and 'Fed speak' helped mortgage rates stay flat this week, as markets and policymakers await more signals in the coming days and weeks."

What will affect mortgage rates in the short-term is the Personal Consumption Expenditures Price Index. "Cooling inflation and a general economic slowdown would put downward pressure on long-term interest rates like the 10-year Treasury yield and in turn, mortgage rates," Divounguy said.

The 10-year Treasury, as of noon on Thursday, was up 13 basis points versus Wednesday to 3.84% from 3.71%. But this follows a number of up-and-down swings since June 21.

That increase is attributed to an upward revision in the gross domestic product data for the first quarter to 2% from the previous 1.3% previous estimate for the period.