Mortgage rates have dipped below 7% — providing home buyers some much-needed relief

• The 30-year fixed mortgage rate fell to 6.94% last week, the first drop below 7% since March.
• Mortgage applications rose this week to their highest level since March, showing increased demand.
• For mortgage rates to keep falling, inflation will likely have to cool further. 

One key part of buying a home became a bit more affordable last week, and some Americans decided to take advantage.

The 30-year fixed mortgage rate fell from 7.02% to 6.94% in the week ending June 14, according to a Bloomberg report that cited Mortgage Bankers Association data released on June 19. This was the first time the 30-year fixed mortgage had fallen below 7% since March.

In the same week, the MBA's index of mortgage applications rose 1.6% to its highest point since March — signaling an uptick in homebuyer demand.

In recent years, high home prices and mortgage rates have made homeownership feel out of reach for many Americans. Business Insider has interviewed several people who have moved in recent years in the hopes of finding lower rents or mortgage payments.

To be sure, the majority of US households own their homes — nearly 66% did so as of 2022, according to the Census Bureau. But aspiring homeowners who missed out on relatively lower home prices and significantly lower mortgage rates of recent years have been dealt a tougher hand.

Some additional relief could also be on the horizon: 30-year mortgage rates are expected to fall to between 6.5% and 7.0% this year — though this would still be much higher than the sub-3% rates seen in 2020 and 2021.

The recent decline in mortgage rates was indirectly tied to the government inflation data released last week — which showed that price growth in May was slower than expected. For mortgage rates to fall considerably further, inflation will likely have to continue to cool.