US mortgage rate shift: 30-year home loan eases to 6.72% after Fed decision; housing demand stays weak

The average rate on a 30-year fixed US mortgage slipped to 6.72% this week, down slightly from 6.74% a week earlier and matching levels last seen three weeks ago, mortgage buyer Freddie Mac said on Thursday. The minor decline offers limited relief for buyers grappling with high home prices and borrowing costs.A year ago, the 30-year rate was 6.73%. The average rate for a 15-year fixed mortgage, often used for refinancing, also fell to 5.85% from 5.87%. These marginal rate changes come as the US housing market remains mired in a prolonged sales slump, dating back to 2022, when mortgage rates began rising from pandemic-era lows.Mortgage rates are primarily guided by the 10-year Treasury yield, which fell to 4.34% on Thursday from 4.37% the previous day. Bond yields have been elevated for most of July, as markets anticipated the Federal Reserve would hold rates steady, which it confirmed on Wednesday. Fed Chair Jerome Powell also dismissed hopes for a rate cut in September, citing persistent inflation and a still-balanced job market.“A September rate cut could push mortgage rates lower at summer’s end, as we saw last year,” said Lisa Sturtevant, chief economist at Bright MLS. “But if inflation expectations stay elevated, rates could remain stuck above 6%.”The 30-year mortgage rate peaked above 7% in mid-January and briefly dipped to 6.62% in April. Forecasts from Realtor.com and Fannie Mae suggest it may ease to around 6.4% by year-end, still too high to reverse the downturn in housing activity.Pending home sales data point to more weakness ahead. The National Association of Realtors reported a 0.8% decline in June contract signings from May, and a 2.8% drop from a year earlier. The homeownership rate, meanwhile, remains stagnant at 65%—its lowest since 2019.Mortgage applications also declined 3.8% last week to their lowest level since May, despite the recent rate dip. “There is still plenty of uncertainty surrounding the economy and job market, which is weighing on prospective homebuyers’ decisions,” said Joel Kan, deputy chief economist at the Mortgage Bankers Association.