Mortgage rates continued to climb over the Memorial Day weekend, increasing calls for benchmark rate cuts despite stronger-than-expected home purchase demand. According to HousingWire’s Mortgage Rates Center, 30-year conforming loan rates averaged 6.97% and 15-year conforming rates averaged 6.83%. These figures are up for a second straight week, slightly higher than the levels seen after the Federal Reserve’s meeting in early May.
Federal Housing Finance Agency Director Bill Pulte urged the Fed to lower benchmark interest rates from 4.25% to 4.5%, citing President Donald Trump’s comments that “Jay Powell needs to lower interest rates — enough is enough.” However, policymakers like Powell have stated their intention to remain patient while measuring the full economic impacts of Trump’s global tariff regime.
The Consumer Price Index (CPI) for April rose 2.3% year over year and 0.2% month over month, which is relatively close to the Fed’s 2% annualized inflation target. However, some market observers believe further price growth may appear in the May data set to be released June 11 by the U.S. Bureau of Labor Statistics.
Employment remains strong as non-farm payrolls added 177,000 jobs in April, above consensus estimates of 130,000, with the jobless rate staying unchanged at 4.2%. Federal Reserve Chair Jay Powell has indicated that preemptively lowering rates to prevent job losses is not a prudent path for the Fed.
Despite stronger home demand, purchase loan application data from the Mortgage Bankers Association (MBA) has been trending above year-ago levels for 16 straight weeks. Much of this higher demand is tied to government loan products through the Federal Housing Administration and U.S. Department of Veterans Affairs. The S&P CoreLogic Case-Shiller National Home Price Index for March showed 3.4% year-over-year growth, down from revised growth of 4% in February.
A slower pace of price appreciation could entice more buyers to enter the market as mortgage rates remain at higher levels. “It is likely that home prices will not grow as fast this year as they have over the past couple of years,” said Bright MLS chief economist Lisa Sturtevant.
Source: https://www.housingwire.com/articles/mortgage-rates-purchase-applications-federal-reserve-bill-pulte-home-prices