Weekly Mortgage Rates Continue to Fall as the Fed Debates Timing

Mortgage rates have fallen throughout June, though it’s been more like a gentle roll down a hill than a tumble off a cliff.

The average rate on a 30-year fixed-rate mortgage fell one basis point to 6.84% the week ending June 26, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.

Overall, that average is 11 basis points below where we began the month. But tenths of a percentage point matter with mortgage interest rates — making today’s 6.84% feel much friendlier than early June’s 6.95%.

Could we see lower mortgage rates in July? Eyes are again turning to the Federal Reserve, which meets at the end of the month. The ink is barely dry on last week’s decision to hold rates steady, but rumors of a potential July rate cut are already swirling.

The Federal Reserve’s bankers tend to present a united front, so any signs of dissension are eye-catching. The “dot plot” released along with the Fed’s June 18 decision suggested potential disagreement among the policymakers. Each dot represents one anonymous Fed member and indicates where they think the federal funds rate (the interest rate actually set by the Fed) should be.

These estimates come out every other Fed meeting, and June’s projections showed more polarization than March. Back then, four bankers thought no cuts were needed this year. In June, that number rose to seven. That doesn’t sound like a big shift, but bear in mind we’re only talking about 19 people total.

More strikingly, there’s still a substantial contingent that does foresee cuts. In both March and June, about half the bankers predicted at least half a percentage point drop. But don’t forget, the number that don’t anticipate any cuts has grown. It certainly gives the appearance of a widening gulf within the group.

A July cut still seems like a long shot; markets currently anticipate a 25% chance of a rate cut at that meeting. But there’s more than a month until the July 30 announcement, which is plenty of time for minds to change.

On Friday, June 20, Federal Reserve board member Christopher Waller told a CNBC interviewer that he believed rate cuts could begin “as early as July.” Waller also noted, however, that he thinks the Fed should “start slow.”

Later on Friday, San Francisco Fed president Mary Daly was also interviewed on CNBC, and she took a different tack. “For me, I look more to the fall,” she said, though Daly noted that serious softening in the job market could create more urgency.

Then on Monday, June 23, Federal Reserve Vice Chair for Supervision Michelle Bowman entered the chat. Speaking at a conference in Prague, Bowman said “it is time to consider adjusting the policy rate.” Assuming inflation remains relatively controlled, Bowman “would support lowering the policy rate as soon as our next meeting.”

Though the Federal Reserve is nonpartisan, it hasn’t gone unnoticed that both Waller and Bowman were appointed to the Fed Board of Governors by President Trump, who has repeatedly called for a substantial rate cut. (Daly, as a federal reserve bank president, is not a presidential appointee.)

Also appointed by Trump? The oft-criticized-by-Trump Chair Powell, who spoke before Congress on Tuesday. As he generally does, Powell declined to state a firm position on rates’ direction, let alone give a timeline, saying: “For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.” During later questioning, he underscored the Fed’s independence, saying “we don’t take into consideration political factors.”

No matter the motivation, lower interest rates could theoretically bolster the lackluster housing market. The Federal Reserve doesn’t set mortgage interest rates, and in recent cycles mortgage rates seemed to blow off the Fed. But if there’s clearer consensus that rate cuts are coming, mortgage rates could drop.

That would be welcome news for home buyers, who pretty much sat out the spring homebuying season. “The relatively subdued sales are largely due to persistently high mortgage rates. Lower interest rates will attract more buyers and sellers to the housing market,” National Association of Realtors Chief Economist Lawrence Yun noted in a press release on Monday.

But lower interest rates can only do so much in the face of high home prices. In May, the median existing home price was $422,800 — the highest ever recorded for the month of May, according to NAR data. A report released Tuesday by the Harvard Joint Center for Housing Studies found that in 2024, the monthly principal and interest payment on a median-priced home reached a record-breaking $2,570. To afford that payment, along with property taxes and homeowners insurance, the Center finds that a buyer in 2024 would have needed to earn at least $126,700 annually.

Want a stark illustration of just how much home prices have risen in recent years? To afford a median-priced home in 2021, a buyer needed an annual salary of $79,300. That’s a nearly $50,000 jump in just three years.