Latest Mortgage Rates Drop – Good News for Homebuyers
In exciting news for home shoppers, the average rate on a 30-year mortgage has eased to its lowest level in 15 months. This drop comes as welcome relief as the housing market has remained out of reach for many Americans.
The rate fell to 6.46% from 6.49% last week, according to mortgage buyer Freddie Mac. A year ago, the rate averaged 7.23%. This latest average rate is the lowest it has been since mid-May last year, when it was 6.39%.
Not only have 30-year mortgage rates decreased, but borrowing costs on 15-year fixed-rate mortgages have also fallen. This is good news for homeowners looking to refinance their home loan at a lower rate, with the average rate dropping to 5.62% from 5.66% last week.
Experts predict that mortgage rates will continue to trend lower overall this year due to signs of waning inflation and a cooling job market. This could lead to the Federal Reserve cutting its benchmark interest rate at its next policy meeting, marking the first such easing in four years.
Sam Khater, chief economist at Freddie Mac, mentioned, “Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year.”
This shift in rates has already resulted in a surge in applications for home refinancing loans, which are now 23% higher than a month ago. However, applications for home purchase loans have not seen the same increase.
Elevated mortgage rates have deterred many potential homebuyers, adding significant costs to monthly payments. This has extended the nation’s housing slump into its third year, despite sales of previously owned U.S. homes picking up in July.
With the rate on a 30-year mortgage heavily influenced by factors such as the bond market and the central bank’s interest rate policies, most economists expect rates to remain above 6% this year. This could pose challenges for prospective homebuyers facing high home prices and a shortage of properties for sale in many markets.
“Home prices are still rising in most markets,” said Lisa Sturtevant, chief economist at Bright MLS. “Opportunities for moderate-income and first-time homebuyers will still be limited even with a drop in rates.“
