Mortgage rates have fallen to their lowest level in nearly 10 months, with the average rate on a 30-year U.S. mortgage dropping to 6.58% from 6.63% last week. This decline is expected to boost purchasing power for prospective homebuyers and help inject life into a stagnant housing market.
The recent drop in mortgage rates has sparked an increase in refinancing activity, with mortgage applications jumping 10.9% last week. Homeowners are taking advantage of lower interest rates to refinance their existing mortgages or tap into their equity gains through cash-out refinancing. However, experts caution that affordability remains a major hurdle for many aspiring homeowners.
The decline in mortgage rates is attributed to weaker-than-expected July U.S. job market data and speculation about the Federal Reserve’s potential rate cut next month. A Fed rate cut could boost the job market and economy, but it also risks fueling inflation and higher bond yields, which could drive mortgage rates upward.
Despite expectations that average mortgage rates will remain above 6% this year, recent forecasts project a slight easing to around 6.4% by the end of the year. However, trends like declining home listing prices and more properties on the market in desirable regions favor buyers, making it essential for policymakers to address affordability concerns.
The latest decline in mortgage rates has provided a much-needed boost to the housing market, but its impact is uncertain, and experts urge caution as the situation continues to unfold.
Source: https://apnews.com/article/mortgage-rates-housing-interest-financing-home-3bba3f6f23c277b000493bdc6bb86f20