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Mortgage rates dipped this week after rising to levels not seen in almost a year, according to the latest survey from Freddie Mac.

The average 30-year fixed-rate mortgage fell to 6.78% for the week ending July 20. That’s down from 6.96% a week earlier, approaching the 7% highs seen in late 2022.

“As inflation slows, mortgage rates decrease,” said Freddie Mac’s chief economist, Sam Khater, in a news release.

What Are the Current Mortgage Rates?

Freddie Mac reports that, as of July 20:

  • The average rate for a 30-year fixed-rate mortgage was 6.78%, down from 6.96% the previous week. A year ago, the average rate stood at 5.54%.
  • The average rate for a 15-year fixed-rate mortgage also fell, to 6.06% from 6.3% the previous week. A year ago, the average rate was 4.75%.

Survey figures came from conventional mortgage applications sent to lenders across the US and then submitted to Freddie Mac. The company buys mortgages and packages them as mortgage-backed securities.

Rates Could Slip as New Home Construction Picks Up to Alleviate Shortage

Mortgage rates are likely to be bumpy for the rest of 2023, as the Federal Reserve has indicated it will need to raise the federal funds rate once or twice more this year. Many expect Fed policymakers will raise the rate by one quarter of one percentage point when their next meeting wraps up on July 26.

The Fed’s actions indirectly affect rates for mortgages and many other loans.

Related: Best Mortgage Lenders

The Fed has been less aggressive with its rate hikes this year compared to last year. Some experts take that to mean mortgage rates will also calm down heading into 2024.

  • Realtor.com predicts rates for 30-year mortgages will fall to 6.1% by the end of this year.
  • Fannie Mae projects the year-end rate for a 30-year mortgage will be 6.3%
  • The Mortgage Bankers Association forecasts an end-of-year rate of 5.8%.

Related: Mortgage Rate Forecast

There’s still a shortage of existing homes for sale, which is keeping prices high. Khater said, however, that an influx of newly built homes should help in the overly tight housing market.

Builder confidence in the market for newly built single-family homes rose five points to 55 in June—the first time in 11 months that the survey moved into “positive territory” (a score above 50), according to the National Association of Home Builders/Wells Fargo Housing Market Index released on June 19.

“The ongoing shortage of previously owned homes for sale has been a detriment to homebuyers looking to take advantage of declining rates,” Khater said. “On the other hand, homebuilders have an edge in today’s market.”

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