June Mortgage Trends: Why Rates May Continue to Climb – What You Need to Know

Mortgage rates are likely to keep rising as we head into June. This trend started in April when new tariffs were introduced. Currently, the 30-year fixed-rate mortgage is hovering above 6.75%, creating challenges for many homebuyers who are already at their financial limits. While home prices are increasing more slowly than last year, they’re falling in some areas like Texas and Florida.

Joseph Brusuelas, the chief economist at RSM US, notes that several significant economic factors are driving these higher rates. He believes that changes in global economics are pushing long-term interest rates up. Specifically, the gap between yields on 30-year and 10-year bonds is widening, suggesting faster economic growth, higher inflation, and a possible increase in the Federal Reserve’s policy rates. So, it’s unlikely we’ll see mortgage rates drop dramatically anytime soon.

Looking ahead, Fannie Mae predicts that mortgage rates will average around 6.5% from April through June, while the Mortgage Bankers Association expects an average of 6.7%. For these estimates to hold true, rates would need to drop in June, considering they averaged 6.8% during the previous two months.

Meanwhile, the Federal Reserve is adopting a cautious approach. Chair Jerome Powell emphasized uncertainty during a recent meeting, noting that the Fed is waiting to see how the economy evolves, especially amidst potential recession worries and enduring inflation.

As for house prices, they rose about 4% nationally between the first quarters of 2024 and 2025, a slowdown compared to nearly 7% growth the previous year. Markets like Newark, New Jersey saw impressive gains, while places like Lakeland, Florida experienced declines. Overall, high mortgage rates are leading to decreased demand, but a shortage of available homes keeps most prices steady. However, in places like Florida and Texas, new construction is affecting resale home prices.

This shift in the housing market reflects broader trends where many buyers are struggling to find affordable homes, prompting sellers to lower their asking prices.

In summary, while predictions for lower rates in the future are optimistic, the reality is pointing towards a continuation of higher rates and fluctuations in house prices. As the market reacts to economic conditions, both buyers and sellers will need to stay informed and adaptable.

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