Weekly Mortgage Rates Dip, Hopes of Multiple Rate Cuts Wane

Average fixed mortgage rates fell slightly this week, with the 30-year rate continuing last week’s dip below 7%.

The average rate on the 30-year fixed-rate mortgage fell to 6.84% in the week ending June 13, according to rates provided to NerdWallet by Zillow, a decrease of five basis points from the previous week. A basis point is one one-hundredth of a percentage point.

Don’t expect rates to change too much anytime soon. The Federal Reserve’s meeting on June 11-12 concluded with a move to leave the federal funds rate — which influences mortgage rates — unchanged at a range of 5.25% to 5.5%. The Fed hasn’t touched this benchmark rate since last July, and it’s currently at a 23-year high.

The Fed tempered expectations by indicating plans to cut rates just once by the end of the year, down from an estimated three cuts that were anticipated back in March.

“If the economy evolves as expected, the median participant projects that the appropriate level of the federal funds rate will be 5.1% at the end of this year,” Fed Chair Jerome Powell said in remarks following the meeting. He reiterated that these projections are “not a committee plan” and that the Fed would maintain current rates if the economy remains solid and inflation persists.

Among the 19 members of the committee, eight projected two rate cuts by the end of the year, seven projected one, and four projected none at all.

The latest consumer price index from the Bureau of Labor Statistics shows that consumer prices rose 3.3% in May year over year, slightly better than initial projections of 3.4%. The inflation index has been steadily trending downward since September 2022, when it was at a peak of 6.64%.

If data continues to point to cooling inflation, the Fed is more likely to entertain the idea of a rate cut.

Despite inflation hovering above the committee’s target 2%, central bankers noted “modest further progress” toward this goal in their post-meeting press release, along with an opinion that recent job gains and a low unemployment rate point to strong economic activity.

The next Federal Reserve meeting is July 30-31, and more “good data,” as Powell calls it, will need to materialize before consumers can get excited about any future rate cuts.