Key facts
- Rates for 30-year conventional loans averaged 6.79%, up 6 basis points in the past week.
- Bank of America economists forecast three Federal Reserve rate increases by the end of 2026.
- Logan Mohtashami anticipates one rate hike in 2026.
- Approximately 36% of interest rate traders predict a 25-bps Fed rate increase in July.
- Mortgage applications have declined for the fourth time in five weeks.
- 53% of Americans prefer buying a home over renting or living with family, according to a Bank of America survey.
Mortgage rates are approaching 6.8% as market sentiment shifts towards potential Federal Reserve rate hikes, a significant departure from earlier expectations of multiple rate cuts in 2026. Rates for 30-year conventional loans averaged 6.79%, with jumbo and FHA loans also seeing increases.
Bank of America economists have predicted three rate hikes by the end of 2026, which would reverse all of 2025's cuts. However, HousingWire Lead Analyst Logan Mohtashami considers this aggressive, forecasting only one rate hike for the year, citing persistent core inflation. Interest rate traders echo a hawkish sentiment, with a significant portion anticipating a rate increase at the Fed's July meeting and further hikes by September or October.
The rising rate environment is impacting housing market activity. While weekly pending sales remain higher year-over-year, existing home sales are expected to slow in July due to borrower sensitivity to higher rates. Mortgage applications have declined for the fourth time in five weeks, though purchase activity still exceeds last year's levels. Despite affordability concerns, a Bank of America survey indicates a majority of Americans now prefer homeownership over renting or living with family.
Refinance activity is showing strength, supported by recent rate stability. Experts advise homeowners to prepare for potential refinancing windows by completing pre-qualification processes. Additionally, the U.S. Department of Housing and Urban Development has introduced 14 changes to the FHA's single-family loan programs, aiming to streamline processes and enhance efficiency for homebuyers and lenders.