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Market Update - June 21, 2023

Friday, July 21, 2023

This Market Update is written by our Capital Market specialists each week to bring you insight into what's happening in the market and how it may affect mortgage rates and real estate trends.

For the week of July 14th – July 20th, 30-year and 15-year interest rates have remained flat.

Sam Khater, Freddie Mac's Chief Economist notes that "Incoming data suggest that inflation is softening, falling to its lowest annual rate in more than two years. However, increases in housing costs, which account for a large share of inflation, remain stubbornly high, mainly due to low inventory relative to demand."

In response to rampant inflation in 2022, the Federal Reserve took measures to curb it, leading to substantial interest rate growth. The average 30-year fixed rate mortgage rate more than doubled within the course of the year. As inflation gradually cools, the size of the Fed's rate hikes are diminishing.

Many experts anticipate that mortgage interest rates will fluctuate within a narrower range compared to the spikes experienced earlier in 2022. Nevertheless, it's essential to remain attentive as rates could rise in any given week, especially if global events create widespread economic uncertainty. According to historical data from Freddie Mac dating back to April 1971, the average fixed 30-year interest rate stood at approximately 7.8%. So if you haven't locked a rate yet, don't lose too much sleep over it. You can still get a good deal, historically speaking — especially if you're a borrower with strong credit.

Fed Watch: Looking ahead, all eyes are on the upcoming July 26th Federal Open Market Committee (FOMC) meeting. According to the CME Group, 99.8% of forecasters predict an increase in interest rates, while 0.2% predict rates will remain the same. None of the forecasters expect rates to decrease.

Per Black Knight's Production Metrics, the breakdown of mortgage production volume is as follows: 85.58% for purchase transactions, 11.98%for cash-out refinances, and 2.45% for rate and term refinances.

Per Black Knight 50.0% of all Retail loan production were Government Loans (FHA, VA, USDA), while 49.9%were Conventional and Non-Conforming loans.

News You Can Use

·        US weekly jobless claims fall to two-month low

·        US consumer sentiment near two-year high in July

·        Affordable, Affordable, Affordable: What America’s 20 Hottest Housing Markets All Have in Common Now

·        Homeownership across US Counties

·        Builder Confidence Edges Higher Despite Rising Rate Concerns

·        Strong US apartment construction suggests slide in rental costs

·        These10 states are America's strongest housing markets (cnbc.com)

*Communication is intended for Industry Professionals only and not intended for Consumer Distribution

Interest rate and annual percentage rate(APR) are based on current market conditions as of 07/20/2023, are for informational purposes only, are subject to change without notice and may be subject to pricing add-ons related to property type, loan amount, loan-to-value, credit score and other variables. Estimated closing costs used in the APR calculation are assumed to be paid by the borrower at closing. If the closing costs are financed, the loan, APR and payment amounts will be higher. Contact us for details. Additional loan programs may be available. Accuracy is not guaranteed, and all products may not be available in all borrower's geographical areas and are based on their individual situation. This is not a credit decision or a commitment to lend. actual interest rate, APR, and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Prosperity Home Mortgage, LLC. Not available in all states. Rate is as of 07/20/2023 and is subject to change at any time without notice. Opinions, estimates, forecasts, and other views contained in this document are those of Freddie Mac’s economists and other researchers, do not necessarily represent the views of Freddie Mac or its management, and should not be construed as indicating Freddie Mac’s business prospects or expected results. Although the authors attempt to provide reliable, useful information, they do not guarantee that the information or other content in this document is accurate, current, or suitable for any particular purpose. All content is subject to change without notice. All content is provided on an “as is” basis, with no warranties of any kind whatsoever. Information from this document may be used with proper attribution.

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