Home Loan Rates on Downward Slide for Weeks

Home loan interest rates have dipped for five straight weeks, with the average 30-year fixed mortgage now at 6.67 percent. This decline gives Chicago-area homebuyers a chance to secure more affordable mortgages this summer.

By Don DeBat

Home loan interest rates have been on a downward slide for the past five weeks, giving Chicago-area house hunters hope to lock in affordable mortgages later this summer.

On July 3, Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed home loans nationwide averaged 6.67 percent, down from 6.77 percent a week earlier. A year ago, lenders were quoting 6.95 percent on 30-year fixed loans.

“The average 30-year fixed-rate mortgage decreased for the fifth consecutive week,” said Sam Khater, Freddie Mac’s Chief Economist. “This is the largest weekly decline since early March.”

While declining mortgage rates are encouraging, and overall affordability challenges remain, “we are seeing more sellers enter the market, giving prospective buyers an advantage,” said Khater (left).

Freddie Mac also reported that average 15-year fixed-rate loans declined to 5.80 percent from 5.89 percent a week earlier. A year ago, the 15-year loans averaged 6.25 percent.

The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who place a 20 percent down payment and have excellent credit.

Lenders currently charge 6.80 percent on 30-year fixed-rate jumbo mortgages, and 5.83 percent on 10-year fixed loans. Rates on 5/1 adjustable-rate mortgages are currently 6.04 percent.

How to ‘buy down’ your interest rate

Borrowers who are willing to shop around and pay “points” can “buy down” their interest rate. For example, if you took out a 30-year fixed-rate mortgage at 6.71 percent last week you could easily buy the rate down to 6.50 percent.

A point equals 1 percent of the loan amount. On a $450,000 loan, the 20 percent down payment would be $80,000. A 2-point buy-down would cost about $1,600. If your credit score is 780 or higher, the interest rate could be lower.

Experts say declining mortgage rates show the economy’s surprising resilience in the face of mounting headwinds from President Donald Trump’s tariffs and government job cuts.

According to CME FedWatch, a quarter-point Federal Reserve rate cut in September is likely if President Trump eases some of his aggressive tariff measures.

However, pessimists say lingering inflation, threats of a global trade war, and policy turbulence have created an uncertain economic outlook. In response, the Fed has adopted a wait-and-see approach and left the Fed funds interest rate unchanged this year.

High home prices and skyrocketing homeownership expenses, such as insurance and property taxes, are further compounding the pressure on prospective buyers, analysts say.

The possibility of a job-loss recession is also pushing many households to tighten their budgets and take on less financial risk.

Don DeBat is co-author of Escaping Condo Jail, the ultimate survival guide for condominium living. Visit escapingcondojail.com. For more housing news, visit www.dondebat.biz