Mortgage Rates Little Changed Amid Economic Data Swings

Rates are slightly lower than a year ago, though affordability continues to challenge first-time homebuyers. 

Mortgage rates hold at recent levels

Mortgage rates were little changed over the week, despite intraday volatility driven by economic data. On June 6, a stronger-than-expected jobs report briefly pushed rates higher, while the June 11 CPI report showing slowing inflation nudged them lower.

Rates are slightly lower than a year ago, though affordability continues to challenge first-time homebuyers. 

Zillow expects mortgage rates to finish the year near the mid-6% range, slightly below current levels, supported by a gradually cooling economy. However, inflation pressures from de-globalization and elevated fiscal deficits will likely limit any significant drop.

Recent political chatter around privatizing Fannie Mae and Freddie Mac has also introduced additional uncertainty. While no official policy shift has happened yet, the possibility could exert upward pressure on mortgage rates as investors seek higher returns to offset increased risk.

Impact on the Housing Market

Despite elevated mortgage rates, affordability has actually improved since last year. The typical mortgage payment is down 1.7% compared to the previous May. Buyers also currently have access to the largest housing inventory since July 2020. 

Economic uncertainty held back sales activity in April. The stock market’s significant volatility during this period may have impacted down payments and made households nervous about the future, leading to buyer hesitation. With the stock market off the lows, some easing in economic uncertainty in May, paired with stabilization in mortgage rates, home buying activity may tentatively recover.