The Fed has given some hope to homebuyers by declining to raise the federal funds rate, a key overnight bank lending rate, at its June meeting. Although the Fed rate and mortgage rates move independently, the same market factors drive the rate increases and cuts.
Inflation, job growth and the overall economic outlook impact lenders and how they set rates. A steady Fed rate should translate to fewer increases in mortgage rates. However, availability and affordability may still be obstacles when shopping for a home. In its official statement, the Federal Open Market Committee (FOMC) said, "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," and that "the Committee remains highly attentive to inflation risks." Although the statement did also say that: "The Committee judges that the risks to achieving its employment and inflation goals have moved toward better balance over the past year."
Factors squeezing buyers
Mortgage application volume increased 15.6% from one week earlier for the week ending June 7, 2024, according to the Mortgage Bankers Association. However, homebuyers continue to be challenged by low inventory levels and higher mortgage interest rates.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Housing starts in April 2024 were 3% below the revised March rate and 2% below the April 2023 rate. With many existing homeowners locking in low mortgage rates, inventory will remain challenging as fewer people list homes. A strong job market has led to fewer forced sales that usually accompany unemployment. These are factors you should watch during peak moving season.
Peak moving season runs from April through September, accounting for almost 80% of all moves. Better weather and trying to get kids settled before the new school year begins have made June, July and August the most popular months to resettle. Moving “offseason” may be the way to go if the competition is keeping you out of your desired neighborhood or school district.
Use our tool, in partnership with Bankrate, to compare mortgage rates from several lenders.
Inflation is receding and rates have come down slightly
Slowing inflation and a small increase in mortgage rates is a good news, bad news situation. The average interest rate for 30-year fixed-rate mortgages decreased by .04 basis points to 6.99%, compared to 7.03% the week of May 30.
Buying a home can be both terrifying and exhilarating. It’s probably the biggest purchase you will make in your lifetime. Market factors will largely determine what house you can buy, but not what kind of home you create.
Related Content
-
Like the ETF? Check Out the Cheaper CloneName-brand ETFs are offering lower-cost, higher-returning versions of their famous funds. For long-term investors, they might be a better deal.
-
First-time Homebuyers Are Older Than Ever, Survey RevealsFirst-time homebuyers are now in their late 30s and jostle with cash-rich buyers in the race to buy a home, new research from the National Association of Realtors has found.
-
First-time Homebuyers Are Older Than Ever, Survey Reveals
First-time homebuyers are now in their late 30s and jostle with cash-rich buyers in the race to buy a home, new research from the National Association of Realtors has found.
-
Should You Refinance Your Mortgage Now That the Fed Just Cut Rates?The Fed just cut rates, so mortgage refinance rates will be cheaper. Should you act now, or wait?
-
Mortgage Rates Are Falling: 10 Housing Markets That Could Benefit the MostThese are the top 10 metro areas where the most mortgages are unlocked by lower rates. Plus, the magic number for mortgage rates.
-
With Mortgage Rates Dipping, Is Now a Good Time to Buy a House?Pricing pressure, interest rates, and rising unemployment numbers have sidelined homebuyers. But now that the Fed has cut rates, is it a good time to think about getting back into the market?
-
How Much It Costs to Refinance a Mortgage and Other Questions to ConsiderRefinancing a mortgage works by replacing your current mortgage with a new one. It can save you money or let you tap the equity in your home, but it can take time to break even after upfront costs.
-
How Retirees Can Downsize In Today's Housing MarketRising prices, higher interest rates and a tight supply of smaller homes present challenges. But retirees have an edge.
-
How to Find Foreclosed Homes: Best Foreclosure Listings SitesMaking Your Money Last Find foreclosed homes for sale on these foreclosure listing websites. Search for properties on these free, paid or government sites.
-
Five Housing Markets On the RiseStudy shows homes in five markets are going under contract in less than two weeks, despite a broader national housing market slowdown. Which cities are bucking the trend and why?
