Mortgage Rates Hit Four-Month Low
The average rate for a 30-year mortgage has dipped to 6.63%, marking its lowest point since April. This welcome decrease offers some relief to potential homebuyers who have been deterred by persistently high financing costs. The decline follows three consecutive weeks of falling rates, bringing the average closer to this year’s low of 6.62% recorded on April 10.
Key Takeaways
- The average rate on a 30-year mortgage has fallen to 6.63%, the lowest since April.
- Borrowing costs for 15-year fixed-rate mortgages also decreased to 5.75%.
- Elevated mortgage rates have contributed to a sales slump in the U.S. housing market since early 2022.
- The Federal Reserve’s interest rate policy and economic outlook influence mortgage rates.
- A weaker-than-expected jobs report has increased the likelihood of a Federal Reserve rate cut in September.
Impact on the Housing Market
High mortgage rates have been a significant factor in the U.S. housing market’s sales slump, which began in early 2022. Home sales last year reached their lowest level in nearly three decades. While the current drop in rates is positive news, they remain close to their year-to-date high of 7.04% set in mid-January, continuing to dampen sales activity.
Factors Influencing Rates
Mortgage rates are influenced by a combination of factors, including the Federal Reserve’s monetary policy, economic expectations, and inflation outlook. The 10-year Treasury yield, a key benchmark for mortgage pricing, was trading around 4.23% on Thursday. This yield has seen a slight increase from its previous close, but remains lower than last week, partly due to a recent jobs report that raised concerns about economic slowdown.
The Federal Reserve recently held its main interest rate steady and indicated that inflation remains above its 2% target, pushing back against expectations of an imminent rate cut. However, the latest jobs report has led traders to bet heavily on a rate cut in September, a move that President Donald Trump has advocated for.
Expert Outlook
Economists suggest that while lower rates are beneficial for buyers and sellers, the future trajectory remains uncertain. "A weaker economy could lead to lower mortgage rates, but the risks of higher inflation could keep rates elevated," noted Lisa Sturtevant, chief economist at Bright MLS. Experts generally anticipate the average 30-year mortgage rate to stay above 6% for the remainder of the year, with forecasts suggesting a dip to around 6.4% by year-end.
Market Conditions
Homebuyers who can manage current mortgage rates are finding more options on the market. This increased inventory has led to price reductions in many metropolitan areas, including Miami, Chicago, and Los Angeles. Lower mortgage rates typically encourage more buyers to enter the market, which could potentially lead to an increase in home prices.