Mortgage Rates Drop Again, But Buyers Are Still Nervous

Rates are still above 6.5%, a key affordability threshold.
Key with house on keychain and calculator
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Despite a dip for the third consecutive week, mortgage rates are still above 6.5%—a key affordability threshold—and remain much higher than they were just two years ago. Freddie Mac reports that the 30-year fixed-rate mortgage averaged 6.67% this week. A year ago, rates averaged 5.81%, and in early 2021, they were in the 2% range.

The dramatic change in rates has created a “mortgage rate lock-in effect,” in which homeowners are reluctant to trade in their current ultra-low mortgage rate for a higher one—especially at today’s higher home prices, says Danielle Hale,®’s chief economist. These stubborn would-be sellers are partially the reason housing inventory levels remain so low. “The vast majority of homeowners locked in low rates during the pandemic and aren't particularly excited to give them up in order to buy a new home, unless they really need to move for personal reasons,” Hale says. “The housing market has really seen a double whammy in 2023, with a retrenchment in the number of homes for sale coupled with still-high prices and mortgage rates that have kept both first-time and repeat buyers on the sidelines.”

Potential home buyers are watching rates closely to decide when to make their move, says Sam Khater, Freddie Mac’s chief economist. “However, inventory challenges persist as the number of existing homes for sale remains very low,” Khater says. “Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.” New data this week shows construction of single-family homes reached an 11-month high in May.

Here’s a closer look at how mortgage rates fared for the week ending June 22.

  • 30-year fixed-rate mortgages: averaged 6.67%, down from last week’s 6.69% average. Last year at this time, 30-year rates averaged 5.81%.
  • 15-year fixed-rate mortgages: averaged 6.03%, down from last week’s 6.10% average. A year ago, 15-year rates averaged 4.92%.