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With inflation falling below 5%, mortgage rates moved lower this week. According to Freddie Mac, the average rate on a 30-year fixed mortgage dropped to 6.35% from 6.39% the previous week.
While fast-rising rent prices remain the largest contributor to elevated inflation, it appears that CPI rent growth has peaked and started to cool. Put simply, rent prices continue to be higher than a year ago but are increasing more slowly than they did the previous month. With this decelerating rent price trend to persist in upcoming months – following the trend of asking rent prices reported by the private sector – inflation will slow down even further, pulling down mortgage rates. This could bring some sighs of relief to many buyers. With a 6% mortgage rate, more Americans can afford to purchase the median-priced home by putting down less than 20%.
