US mortgage rates fell to their lowest level in nearly 10 months, giving homebuyers a much-needed boost in purchasing power amid a stagnant housing market. The average rate on a 30-year US mortgage dropped to 6.58% from 6.63% last week, according to Freddie Mac.
The decline is the fourth consecutive week of falling rates, with the latest average rate at its lowest level since October 24th. Borrowing costs on 15-year fixed-rate mortgages also fell, averaging 5.71% compared to 5.75% last week.
Elevated mortgage rates have contributed to a sales slump in the US housing market since early 2022, when rates began to rise from historic lows during the pandemic. Home sales sank last year to their lowest level in nearly 30 years.
The Federal Reserve’s interest rate policy and bond market investors’ expectations for inflation are key factors influencing mortgage rates. A possible Fed rate cut could give the job market a boost but may also fuel inflation, which is already rising.
Inflation reports have shown prices at the wholesale level jumped 3.3% last month from a year earlier, above economists’ forecasts. Consumer prices rose 2.7% in July, unchanged from June. Higher inflation could push bond yields higher and drive mortgage rates upward.
Despite the decline, affordability remains a major hurdle for many aspiring homeowners, with median home price growth slowing nationally but the median sales price still at an all-time high of $435,300.
Homeowners are taking advantage of lower rates by refinancing, with mortgage applications jumping 10.9% last week. Refinance loan applications made up nearly half of all mortgage applications, and adjustable-rate mortgage applications soared 25% to their highest level since 2022.
Source: https://www.pbs.org/newshour/economy/average-30-year-u-s-mortgage-rate-drops-to-lowest-level-since-october