Average mortgage rates remain stable, but more drops are likely

While mortgage rates remained unchanged this past week, further drops are possible as signs from the Federal Reserve point to a short-term rate cut at its next meeting.

"While rates have moderated, we're still at nearly three-year lows, which is good news for buyers looking to purchase a home before school starts," Sam Khater, Freddie Mac's chief economist, said in a press release. "The recent stabilization in mortgage rates reflects modestly improving U.S. economic data and a more accommodative tone from the Federal Reserve to respond to the rising downside economic risk from trade tensions and soft global economic data.

"On the housing front, the latest weekly purchase application data suggests homebuyer demand continues to rise, which is consistent with the slowly improving real estate data from the last two months."

The 30-year fixed-rate mortgage averaged 3.75% for the week ending July 11, unchanged from last week, according to Freddie Mac. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.53%.

The 15-year fixed-rate mortgage averaged 3.22%, up from last week when it averaged 3.18%. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.02%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.46% with an average 0.4 point, up from last week when it averaged 3.45%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.86%.

Zillow's rate tracker showed a slight increase this past week after the Bureau of Labor Statistics employment report came in stronger than expected.

"Following a lackluster report last month, Friday's jobs figures greatly exceeded industry expectations and, at least momentarily, reduced concerns about a looming economic slowdown," Matthew Speakman, an economic analyst at Zillow, said in a press release. "The news also opened up the possibility that the Fed would take a less aggressive approach to monetary policy than it had previously indicated, possibly waiting to cut the overnight lending rate.

"However, in testimony that began on July 10, Chairman [Jerome] Powell asserted that despite the rosy jobs figures, the Fed believes the economic outlook has not improved in recent weeks — a broad hint that the central bank still plans to reduce rates at an upcoming meeting. As a result, mortgage rates are poised to fall in the coming days and are likely to stay near their current, multiyear lows for the immediate term."