US mortgage rates fall to lowest in month as Middle East tensions ease
The average for a 30-year fixed loan drops to 6.47% from 6.52% a week earlier, Freddie Mac says
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[WASHINGTON] US mortgage rates declined to the lowest in a month as easing tensions in the Middle East cooled inflation concerns and provided some relief for homebuyers.
The average for a 30-year fixed loan dropped to 6.47 per cent from 6.52 per cent a week earlier, Freddie Mac said in a statement on Thursday (Jun 18). The rate was 6.81 per cent a year ago.
The spring home-selling season is drawing to a close after a turbulent period for borrowing costs, which shot up following the outbreak of war with Iran at the end of February. But an interim peace deal announced this week and the planned reopening of the Strait of Hormuz led to lower crude prices, helping reduce upward pressure on mortgage rates.
Spring sales have shown some unexpected resilience. Buyer contracts rose 3.8 per cent in May, though they remain near historically low levels, the National Association of Realtors said on Wednesday. The measure, more forward-looking than closed sales, suggests buyers may be adjusting to higher rates.
Still, affordability is a problem. The median US monthly housing payment rose to US$2,647 in the four-week period ended Jun 14, the highest level in a year and about US$100 shy of 2023’s record, according to a report from Redfin.
Additionally, the number of cities where a typical starter home is worth US$1 million or more has almost tripled since February 2022, climbing to a record 242 from 80, Zillow said. California dominated the list, while New York and New Jersey recorded the fastest growth, according to the study.
“The affordability challenge is accompanied by growing economic uncertainty,” Bright MLS chief economist Lisa Sturtevant said. “More would-be buyers, particularly first-time and moderate-income buyers, are being priced out of the market, while high-end buyers continue to drive market activity.” BLOOMBERG
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