Mortgage Rates Near 7% As Housing Demand Holds Strong

Mortgage rates have continued to climb this week, nearing the 7% threshold for locked loans across all borrower credit profiles. Despite these increasing affordability pressures, demand for both home purchases and refinances has not experienced a significant decline. Data from HousingWire’s Mortgage Rates Center on Tuesday indicated that the average rate for 30-year conforming loans reached 6.94%, representing a 9 basis point increase from the previous week. Similarly, rates for 30-year jumbo loans also averaged 6.94%, up by 10 basis points over the past week. Rates for 30-year Federal Housing Administration (FHA) loans saw an 8 basis point rise, settling at 6.63%. These rates have shown a gradual upward trend since they bottomed out near 6.15% for 30-year conforming products in March. However, recent application data released by the Mortgage Bankers Association (MBA) for the week ending July 17 revealed a resilient borrower demand, with overall mortgage applications increasing by 1.9%. When compared to the same period in the prior year, refinance demand showed a notable increase of 7%, while purchase demand remained relatively flat. Bob Broeksmit, the MBA’s president and CEO, commented in a statement that mortgage applications rebounded last week despite rising rates, underscoring the sustained strength of homebuyer demand. He further noted that as inventory levels improve in numerous markets, more potential buyers are finding opportunities to enter the housing market, even with elevated borrowing costs. Broeksmit anticipates that while some economic uncertainty may persist in the upcoming months, the combination of robust housing demand and an increasing supply of homes is expected to continue supporting purchase activity. Looking ahead, the Federal Open Market Committee (FOMC) is scheduled to conclude its second meeting under the current Federal Reserve Chair on Wednesday. Current projections suggest it is unlikely that the committee will alter its current policy rate, which stands between 3.5% and 3.75%. The CME Group’s FedWatch tool indicates that approximately 70% of interest rate traders anticipate no change to the federal funds rate, while about 30% predict a 25 basis point increase. The FOMC is widely expected to maintain the federal funds rate unchanged in July, with a hold being the most probable outcome.