Mortgage Rates May Go Back up Again Next Month

With the Federal Reserve announcing more rate hikes next month, that may mean that mortgage rates — after enjoying low rates the past few weeks — will go back up next month.

On June 21, Jerome Powell, the chairman of the Federal Reserve, said that there will be more increases in the interest rates until inflation is under control. One week before Powell’s announcement, the Federal Open Market Committee (FOMC) announced that, for the first time in over a year, its members decided not to raise interest rates. However, Powell indicated that the committee will find it “appropriate” to increase rates “somewhat further by the end of the year.”

During the month of June, Powell said the Fed would not hike interest rates at this time, mortgage rates fell. According to Freddie Mac, there were three straight weeks of decline in the 30-year fixed-rate mortgage (FRM), from 6.79% in the week ending June 1 to 6.67% the week ending June 22. The 15-year FRM had one increase this month, but the rate dropped from 6.18% the week of June 1 to 6.03% the week ending June 22.

“Mortgage rates slid down again this week but remain elevated compared to this time last year,” said Freddie Mac Chief Economist Sam Khater in a statement. “Potential homebuyers have been watching rates closely and are waiting to come off the sidelines. However, inventory challenges persist as the number of existing homes for sale remain very low. Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.”

But any euphoria over declining mortgage rates might come to a halt as the FOMC said that interest rates may go up another 0.5% before the end of the year. Currently, the Fed’s benchmark rate for borrowing is between 5% and 5.25%. Although the rate of inflation has not been as high as in months past, Powell said it still “remains well above” its target of 2% and the Fed has “a long way to go” to reach its target.