Mortgage rates fall to three-month low, luring home buyers back into the market

By Aarthi Swaminathan

Mortgage rates fall for third week in a row

The numbers: Mortgage rates fell to the lowest level in three months, bringing home buyers back into the market and pushing up demand for mortgages.

The 30-year mortgage rate declined for the third week in a row.

The decrease in rates caused the market composite index - a measure of mortgage application volume - to inch up in the past week, according to the Mortgage Bankers Association (MBA) on Wednesday.

The market index rose 0.8% to 212 for the week ending June 21 from a week ago. A year ago, the index stood at 216.1.

Key details: The purchase index - which measures mortgage applications for the purchase of a home - rose 1.2% from a week prior.

The refinance index fell 0.1%.

The average contract rate for the 30-year mortgage for homes sold for $766,550 or less was 6.93% for the week ending June 21. That's down from 6.94% the week before.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $766,550, was 7.04%, down from 7.12% the previous week.

The average rate for a 30-year mortgage backed by the Federal Housing Administration was 6.82%, up from 6.79% the week before.

The 15-year was down to 6.46% from 6.47% a week prior.

The rate for adjustable-rate mortgages was up to 6.29% from 6.27%.

The big picture: The housing market is only seeing modest improvement in affordability in the face of declining rates.

Aspiring homeowners who are weary of high rates are taking advantage of a relative dip in mortgage rates below 7%, which pushed up applications for mortgages.

But that needs to be paired with a similar improvement in housing supply, which hasn't fully materialized yet. New listings rose 7.7% as of mid-June, compared with last year, real-estate brokerage Redfin said in an analysis. The median monthly mortgage payment rose by 7.8% over the same time period.

What the MBA said: "Mortgage rates were ... [at] the lowest level in more than three months," Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, said in a statement.

"Government purchase loans, primarily [mortgages backed by the Federal Housing Administration] and [Veterans Affairs], saw gains of more than 2% over the previous week," he added, "as homebuyers in those segments sought to take advantage of the recent rate relief."

-Aarthi Swaminathan

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06-26-24 0700ET

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