\n<\/p>\n
Mortgage rates jumped last week<\/a> amid a debt ceiling impasse and expectations of another federal funds rate hike. However, rates have started to reverse course over the last few days, following news of a debt agreement<\/a> and an expectation that the\u00a0Federal Reserve<\/strong><\/a><\/strong> may pause hikes.\u00a0<\/p>\n On the fiscal side, President Joe Biden<\/a> and House Speaker Kevin McCarthy struck a deal on Saturday to suspend the $31.4 trillion U.S. debt limit until January 2025 and cap government spending. On Wednesday, the deal passed in the House<\/a> with a wide margin (314-117) and the support of both parties. The Senate is expected to vote on the bill on Friday, just a few days prior to Monday\u2019s default deadline. <\/p>\n Meanwhile, on the monetary front, there is a growing perception that the Fed may skip a federal funds rate hike in its meeting scheduled for June 13-14, despite a still-strong economy and persistent inflation. Officials want to assess more economic and bank lending data and may hike rates later this summer, as the Wall Street Journal<\/strong><\/a> reported. Fed officials are especially focused on Friday’s jobs report and signs that the labor market has finally cooled down.\u00a0<\/p>\n In the housing market, Freddie Mac<\/strong><\/a>\u2018<\/strong>s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the weekly rate increase. The 30-year fixed-rate mortgage averaged 6.79% as of June 1, up 22 basis points from last week\u2019s 6.57%. The same rate averaged 5.09% a year ago at this time.<\/p>\n Sam Khater, Freddie Mac\u2019s chief economist, said the increase in rates measured by the survey happened \u201cas a buoyant economy has prompted the market to price in the likelihood of another Fed rate hike.\u201d <\/p>\n \u201cAlthough there has been a steady flow of purchase demand around rates in the low to mid 6% range, that demand is likely to weaken as rates approach 7%,\u201d Khater said in a statement.<\/p>\n Other indexes show mortgage rates\u2019 downward trend in the last few days amid lower fiscal and monetary pressures. <\/p>\n The 30-year fixed rate for conventional loans, which hit 7.14% at Mortgage News Daily<\/strong><\/a> on Friday, was down to 6.88% on Wednesday. HousingWire\u2019s<\/strong> Mortgage Rates Center<\/a> showed Optimal Blue<\/strong>\u2019s 30-year fixed rate for conventional loans at 6.72% on Wednesday, down from 6.85% on Friday.<\/p>\n Mortgage rates usually follow the 10-year Treasury yield, which retreated from 3.81% on Monday to 3.60% on Thursday morning as a resolution to the debt ceiling impasse seemed to materialize, according to George Ratiu, the chief economist at Keeping Current Matters. <\/strong><\/p>\n \u201cThe spread between the 10-year Treasury and the Freddie Mac 30-year mortgage rate remains close to 300 basis points, a range typically seen during times of significant economic volatility,\u201d Ratiu said in a statement. <\/p>\n \u201cWhile mortgage bond investors remain concerned about the downside risks for both the economy and housing markets, a successful debt ceiling bill is expected to bring mortgage rates lower in the weeks ahead,\u201d Ratiu said.<\/p>\nThe weeks ahead\u00a0<\/h2>\n