Markets concur with the view that inflation increases are temporary, according to a Freddie Mac economist.

Mortgage rates continue to ease despite worries that the Federal Reserve will eventually have to take measures to fight inflation, with rates on 30-year fixed-rate mortgages continuing to inch further below 3 percent.

Sam Khater | Photo credit: Freddie Mac

“Mortgage rates continue to drift down as markets concur with the view that inflation increases are temporary,” Freddie Mac Chief Economist Sam Khater said in a statement. “While mortgage rates are low, purchase demand has weakened over the last couple of months, primarily due to affordability constraints stemming from high home prices. With inventory tight, the slowdown in demand has yet to impact prices, meaning the summer will likely remain a strong seller’s market.”

For the week ending June 17, Freddie Mac’s weekly Primary Mortgage Market Survey reported average rates for the following types of loans:

  • For 30-year fixed-rate mortgages, rates averaged 2.93 percent with an average 0.7 point, down from 2.96 percent last week and 3.13 percent a year ago. Rates for 30-year loans hit an all-time low of 2.65 percent in records dating to 1971 during the week ending Jan. 7, 2021.
  • Rates on 15-year fixed-rate mortgages averaged 2.24 percent with an average 0.6 point, up slightly from 2.23 percent last week but down from 2.58 percent a year ago. The all-time low for 15-year fixed rate mortgages in records dating to 1991 was also seen during the week ending Jan. 7, 2021, when rates averaged 2.16 percent.
  • For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.52 percent with an average 0.3 point, down from 2.55 percent last week and 3.09 percent a year ago. Rates on 5-year ARM loans hit an all-time low of 2.56 percent during the week ending May 2, 2013, in Freddie Mac records dating to 2005.

Source: Freddie Mac Primary Mortgage Market Survey.

Freddie Mac’s survey tracks conventional, conforming, home purchase loans for borrowers who put 20 percent down and have excellent credit. Borrowers taking out bigger loans, making smaller down payments, or with lower credit scores can expect to be quoted higher rates.

Mortgage rates surged in February and March on fears that the Fed will soon be forced to take steps to counter inflation. The Consumer Price Index was up 5.0 percent from a year ago in May, the biggest annual increase since August, 2008.

This week, Fed policymakers restated their commitment to continue buying $80 billion in long-term Treasurys and $40 billion in mortgage-backed securities each month “until substantial further progress has been made” toward the Fed’s employment and price stability goals. Those purchases are credited with helping keep mortgages and other long-term interest rates low.

In a statement, members of the Federal Open Market Committee acknowledged worries about inflation, but characterized them as largely transitory. For now, the Fed is willing to let inflation rise “moderately above 2 percent for some time” as long as longer-term expectations remain “well anchored” at 2 percent.

However, in a forecast released this week, economists at Fannie Mae warned that rents and home prices are a significant component of inflation, and that rising housing costs could drive inflation out of the Fed’s comfort zone.

Fannie Mae economists downgraded their forecast for second and third quarter home sales, citing listings shortages and constraints on homebuilders that are denting home sales and driving up home prices and rents.

Email Matt Carter

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
The best event in real estate kicks off next week! Tickets are selling quickly.Register Now×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription