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Why Have Interest Lending Rates Fallen + Where Are We Going? per Local ATX lender Joel Richardson Vera Bank

 I’ve received a lot of questions this week about rate direction and my thoughts on what’s going on and where we’re headed.


Let’s do some quick catch-up!

At the beginning of June, I was quoting 6.875% on a 30yr fixed mortgage. Today? 6.49%! That’s a huge movement in two short weeks.


What’s going on?

Despite the Fed stating that inflation is not over and that they’ll be moving the rate lower only once this year, we’ve seen some deflationary numbers this week. It’s important to note that one data point doesn’t make a trend, but both CPI (Consumer Price Index) and PPI (Producer Price Index) dropped in May—below analysts’ expectations. Today, we see lower import prices and consumer sentiment waning. These are the types of reports that typically move rates lower, and we are seeing that.


Where are rates going?

That’s the million dollar question! I think we’ll stay under 7%. There is nothing pushing them higher right now. Can they go lower? Sure, but let’s not bet on much lower. Listening to my buyers, they seem content sub-7% and calls have picked up.


What about the Fed?

Note that the Fed controls short term rates. Mortgage rates are long term fixed rates, so the Fed’s commentary telling us of rate direction means a lot. On Wednesday, they concluded the June meeting. Chair Powell gave a nod to the lower May CPI number, but they acknowledged the inflationary figures from March and April. He explicitly said one rate cut this year. Remember in January when the talking heads predicted multiple cuts? That’s not happening. Now, we find ourselves at the dawn of an election.  The Fed has always prided itself on being non-political. They don’t want to be seen as steering election results. So, I think they will push any rate cuts past the election. That would be a December movement. Slim chance for a July cut as that is less than four months before the November presidential election.


With all that said, if we can hang in the 6.25% to 6.75% range through the remainder of the year, we will see a strong residential real estate market.


Hope this helps you work with your clients, and of course, if I can assist with any questions or buyers’ needs, please contact me. Note: I’m around all Memorial Day weekend.





VeraBank, N.A.
Joel Richardson
SVP ‑ Central Texas Mortgage Manager, Austin
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