Market Update
Mortgage rates decline, but economist warns of 'higher for longer' trend
The 30-year, fixed-rate loan averaged 6.47% on a weekly basis
June 18, 202612:47 PM ET7,011 Views
Key takeaways
The average 30-year fixed mortgage rate fell to 6.47% this week, according to Freddie Mac.
Decline follows recent volatility tied to economic data and global events, and as lingering inflation and supply concerns keep borrowing costs elevated.
Buyers and homeowners should plan for rates to stay “higher for longer,” according to Homes.com Chief Residential Economist Brad Case.
Mortgage rates edged lower this week — but some economists say there likely won't be any significant relief in the near term.
In the week ended Thursday, the30-year, fixed-rate mortgage averaged 6.47%, down from the previous week's 6.52% average, according to mortgage giant Freddie Mac. It's also down from the average in the same week last year.
The 15-year, fixed-rate mortgage also fell, averaging 5.81% — lower than last week and last year.
Similarly, the more volatile daily mortgage rate averages declined on Thursday. The 30-year, fixed-rate mortgage stood at 6.58% as of the afternoon, according to Mortgage News Daily. The 15-year, fixed-rate mortgage was averaging 6.15%.
Both measures moved lower after a small increase on Wednesday.
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Mortgage rates will likely stay 'higher for longer'
The mortgage market is quite reactive — especially to economic data and geopolitical tensions. The last two weeks have delivered on both.
For one, Iran and the United States have signed a tentative peace deal that could bring an end to the nearly four-month conflict. In the time since the war began, mortgage rate averages have climbed more than 50 basis points — mostly due to inflationary pressures.
Undoing that damage is likely more difficult than a peace deal, according to Brad Case, chief residential economist for Homes.com.
"Investors are going to take some convincing before they'll really believe that the current tensions in the Middle East are actually resolved," he said in an email. "Even if the prospect of peace — or at least a return to the lower tensions pre-attack — were convincing, it would likely take months before the disruption to the petroleum supply chains would be entirely past us."
More than that, recent economic data and commentary from the Federal Reserve have signaled that experts think "inflation is a very real problem for the remainder of 2026 and into 2027," Case said.
Indeed, the central bank held its benchmark interest rate steady at its meeting on Wednesday and signaled that it doesn't "seem inclined merely to hope that inflation will go away," according to Case, instead hinting at the possibility of a rate hike later this year.
With that in mind, "mortgage rates are likely to remain 'higher for longer,'" Case added.
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