30-Year Mortgage Rates Hit Lowest Point in Nearly 10 Months

WASHINGTON, D.C. — The average rate on a 30-year U.S. mortgage dropped to its lowest level in nearly 10 months, increasing purchasing power for potential homebuyers in a sluggish housing market. According to mortgage buyer Freddie Mac, the long-term rate fell to 6.58% from 6.63% last week, marking a slight decrease from an average of 6.49% a year ago.

Similarly, borrowing costs on 15-year fixed-rate mortgages also declined. The average rate for these loans dropped to 5.71% from 5.75% last week. A year prior, the rate was 5.66%, Freddie Mac reported.

Since early 2022, elevated mortgage rates have caused a slump in the U.S. housing market, leading home sales to plummet to their lowest levels in almost 30 years. The current drop represents the fourth consecutive week that mortgage rates have declined, positioning the average 30-year mortgage rate at 6.58%, the lowest since October 24.

Mortgage rates are influenced by various factors, including the Federal Reserve’s interest rate policies and bond market expectations regarding the economy and inflation. Notably, the 10-year Treasury yield serves as a critical benchmark for home loan pricing. As of Thursday, the yield was at 4.29%, a slight rise from 4.24% the day before.

The recent drop in mortgage rates has led to a spike in refinancing activity. The Mortgage Bankers Association reported that mortgage applications surged by 10.9% last week, with nearly 47% of applications attributed to refinancing. Refinance applications rose by 23%, marking the strongest performance since April.

Joel Berner, a senior economist at Realtor.com, emphasized the importance of this development for homebuyers. “Homebuyers who have been sidelined by high financing costs got some encouragement recently,” Berner said. However, he noted that it remains to be seen if lower rates will drive more buyers back to the market.

Despite these fluctuations in mortgage rates, affordability continues to challenge many aspiring homeowners. As of June, the median sales price for previously occupied homes reached a record high of $435,300, despite home price growth slowing nationally.

Current trends show that homeowners are actively refinancing, with cash-out refinancing reaching a near three-year high during the April-June quarter. Many are taking advantage of their equity gains accumulated over rising property values.

Looking ahead, mortgage rates are not expected to see dramatic declines soon, but even minor drops could significantly impact the buying and refinancing decisions for many. The Federal Reserve’s next meeting is set for September 17, with many awaiting potential developments.