Mortgage Rates Inch Up Amid Positive Economic Reports and Credit Downgrade

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The latest data released by Freddie Mac indicates that mortgage rates in the US are slowly increasing. As of August 3, the 30-year fixed-rate mortgage averaged 6.9%, rising by 9 basis points from the previous week’s rate of 6.81%.

Similarly, the average rate for the 15-year mortgage has also experienced an uptick, reaching 6.25% compared to last week’s rate of 6.11%. This marks a significant increase from the 4.26% recorded a year ago.

Freddie Mac compiles its weekly report on mortgage rates based on thousands of applications received from lenders nationwide. These applications are submitted to Freddie Mac whenever a borrower applies for a mortgage.

Furthermore, separate data from Mortgage News Daily revealed that the 30-year fixed-rate mortgage was averaging 7.2% as of Thursday afternoon.

The recent downgrade of the US government’s debt rating by Fitch Ratings has also had an impact on mortgage rates. This downgrade was followed by credit downgrades for Freddie Mac and Fannie Mae a day later. These government-sponsored enterprises receive financial support from the US government.

Despite these developments, it is important to note that mortgage rates remain subject to change based on market conditions and economic factors. Homebuyers and homeowners should regularly monitor these rates and consult with their trusted lenders to make informed decisions.

Stay informed about the latest trends and updates in the mortgage market to secure the best rates for your home financing needs.

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Fitch Downgrades U.S. Government Credit Rating

In a move that has garnered significant attention, Fitch Ratings has downgraded the U.S. government’s credit rating from AAA to AA+, citing several prominent reasons. The decision by Fitch reflects their concerns about the “expected fiscal deterioration,” as well as the “high and growing” government debt burden. Additionally, they highlighted an “erosion of governance” in response to repeated debt-limit standoffs and other challenging circumstances.

Diminishing Affordability despite Higher Rates

Freddie Mac, a leading player in the mortgage industry, has acknowledged that the current higher interest rates have not had a significant impact on affordability. Despite the rise in rates and a decrease in purchase demand, home prices continue to soar primarily due to limited unsold inventory. Sam Khater, Chief Economist at Freddie Mac, emphasizes this concern in stating, “Despite higher rates and lower purchase demand, home prices have increased due to very low unsold inventory.”

Optimistic Outlook on the Economy

George Ratiu, Chief Economist at real-estate data firm Keeping Current Matters, shares an optimistic view on the economy and job market. Ratiu believes that with the positive pace of economic growth and stability in employment, the possibility of a recession within the next six to twelve months is diminishing. However, he does caution that mortgage rates are expected to remain elevated for the next few months, putting continued pressure on affordability. For buyers who are not in a hurry, Ratiu suggests waiting until the fall and winter months, which could present better values and a less competitive environment for finding the right home.

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