Mortgage rates fell to their lowest level since mid-May, falling below the 4.5% range they have been in since that time.
A drop in the 10-year Treasury yield late last week helped push the 30-year fixed rate mortgage lower. But going forward, observers remain concerned about the impact of inflation, while this morning's Bureau of Labor Statistics report has added more caution to the outlook.
"With rates at a seven-week low and purchase demand continuing to edge higher, it's an encouraging sign as prospective homebuyers respond to modest improvements in affordability," Sam Khater, Freddie Mac chief economist, said in a press release.
How mortgage rates moved this week
The 30-year FRM averaged 6.43% as of July 2, according to the Freddie Mac Primary Mortgage Market Survey. This is down from
The 15-year FRM had a similar week-to-week decline. It is now at 5.79%, versus last week when it averaged 5.84%. But unlike the 30-year FRM, this product is in the same range
The 10-year Treasury, which fell as low as 4.37% on June 25 and June 26, increased by 9 basis points at Tuesday's close to 4.47%. The next day, it gained an additional 2 basis points to 4.49%.
As of 11 a.m. Thursday morning, it was at 4.47%.
Lender Price data posted on the National Mortgage News website has the 30-year FRM at 6.62%. This is an improvement over the 6.74%
The conforming 30-year FRM as tracked by the Mortgage Bankers Association fell 2 basis points
"Last week's modest decline in mortgage rates helped sustain borrower interest, with home purchase demand up slightly and continuing to outpace last year's levels," Bob Broeksmit, president and CEO of the MBA, said in a Thursday statement. "Buyers are benefiting from a more balanced housing market as inventory improves and home-price growth moderates in many areas."
This is likely to bolster housing activity through the summer, Broeksmit said.
How the jobs report impacts housing
"The economy is slowing, but inflation remains above 4%," Green said. "That leaves policymakers trapped between two problems and without an easy solution."
At the start of 2026, the discussion was how many times the Federal Open Market Committee would cut rates.
"Now, investors are asking a very different question: can the Federal Reserve cut at all if inflation remains this elevated?" Green asked.
While the short-term rates the FOMC controls are not used to price fixed-rate mortgages, the 10-year Treasury yield changes as investors react to those decisions.
The report buys the Fed some time, not force its hand, said Sam Williamson, senior economist at First American, in a comment.
"Softer payroll growth and downward revisions take pressure off the tightening case, while the drop in labor force participation modestly strengthens the case for easing," Williamson said. "But the lower unemployment rate, low jobless claims and steady wage growth do not make a strong case for near-term cuts."
Nor does the report drive housing demand.
"Positive job growth still supports incomes and buyer confidence, but weaker participation and uneven sector gains do not point to the kind of labor-market momentum that would quickly unlock demand," Williamson said. "Life-driven moves, modest affordability improvement and rebalancing inventory should continue to support activity, but mortgage rates remain the primary constraint."
After the report was released, the MBA held to its forecast that the FOMC will not act at any of its remaining meetings in 2026, and
"Overall, this report shows a job market that is a bit shakier than the May data had indicated, but inflation still remains too high," Mike Fratantoni, the MBA's chief economist, said in a statement.
