Mortgage Rates Hit Near 10-Month Low
The average rate for a 30-year U.S. mortgage has dipped to its lowest point in nearly ten months, reaching 6.58%. This decrease offers a much-needed boost to potential homebuyers, potentially revitalizing a sluggish housing market. The drop marks the fourth consecutive week of declining rates.
Key Takeaways
- The average rate on a 30-year mortgage fell to 6.58% from 6.63% last week.
- This is the lowest rate seen since October 24, when it was 6.54%.
- Borrowing costs for 15-year fixed-rate mortgages also decreased to 5.71%.
- Mortgage applications saw a significant jump of 10.9% last week.
- Refinance applications surged by 23%, while adjustable-rate mortgage applications soared by 25%.
Impact on the Housing Market
Elevated mortgage rates have contributed to a sales slump in the U.S. housing market since early 2022. Last year, home sales reached their lowest level in nearly three decades. The recent decline in rates could encourage more buyers to enter the market, though it remains to be seen if the current trend is substantial enough to significantly alter market dynamics.
Factors Influencing Mortgage Rates
Mortgage rates are influenced by a variety of factors, including the Federal Reserve’s monetary policy and market expectations regarding the economy and inflation. The 10-year Treasury yield, a key benchmark for mortgage pricing, has seen a slight increase recently. However, weaker-than-expected July jobs data has fueled speculation that the Federal Reserve might cut its short-term interest rate next month. Such a cut could stimulate the economy but might also exacerbate inflation, potentially pushing mortgage rates higher.
Future Outlook
Economists anticipate that the average rate for a 30-year mortgage will likely remain above 6% for the remainder of the year. Forecasts from Realtor.com and Fannie Mae suggest the average rate could ease to approximately 6.4% by year-end. This period of lower rates has already spurred an increase in mortgage applications, with a notable surge in refinancing and adjustable-rate mortgages.