Mortgage and Refinance Interest Rates Mostly Higher Again on Friday

💡 Mortgage and refinance interest rates rose for the second consecutive day, with the average 30-year fixed mortgage rate reaching 6.98%.

The Federal Reserve's hawkish stance continues to weigh on mortgage rates, with investors pricing in a higher-for-longer interest rate environment. The average 30-year fixed mortgage rate rose to 6.98% on Friday, up from 6.92% a day earlier.

Mortgage Market Update

The mortgage market has been under pressure in recent weeks, with rates rising in response to the Federal Reserve's hawkish comments. The 30-year fixed mortgage rate has increased by over 1% since May, making it more expensive for homebuyers to purchase a home. This has had a chilling effect on the housing market, with existing home sales falling by 3.4% in June compared to the previous month.

Refinance Activity Plummets

Refinance activity has also declined sharply in recent weeks, as borrowers take advantage of higher interest rates to lock in their current mortgage rates. The refinance index has fallen by 25% since May, with many borrowers opting to delay refinancing until rates come back down.

What's Driving the Rise in Rates

The main driver of the rise in mortgage rates is the Federal Reserve's decision to maintain a hawkish stance on interest rates. The central bank's inflation targeting framework is focused on bringing inflation down to 2%, and it has signaled that it will keep interest rates elevated until it achieves this goal.

What It Means for Investors