The average rate on a 30-year US mortgage has fallen to its lowest level in nearly 10 months, dropping to 6.58%. This decrease is giving prospective homebuyers a boost in purchasing power and could help inject life into the stagnant housing market.
According to Freddie Mac, borrowing costs on 15-year fixed-rate mortgages also fell, with the average rate decreasing to 5.71% from 5.75% last week. The latest drop is the fourth consecutive week of declining rates, which has pushed the average rate on a 30-year mortgage to its lowest level since October.
The long-term interest rate decrease is influenced by factors such as the Federal Reserve’s interest rate policy decisions and bond market investors’ expectations for the economy and inflation. The 10-year Treasury yield, a key barometer, was at 4.29% midday Thursday, up slightly from 4.24% late Wednesday.
The recent drop in mortgage rates has been driven by weaker-than-expected July US job market data, which has sparked speculation about a potential Federal Reserve rate cut next month. However, economists expect the average rate on a 30-year mortgage to remain above 6% this year.
In related news, mortgage applications jumped 10.9% last week from the previous week, with refinancing applications increasing by 23%. The surge in refinance applications was driven primarily by homeowners applying for new loans, but adjustable-rate mortgage applications also saw a significant increase of 25%, the highest level since 2022.
Source: https://abcnews.go.com/Business/wireStory/average-rate-30-year-mortgage-drops-lowest-level-124650949