By Makailah Gause
NEW YORK (Multibagger) - The average rate on the popular U.S. 30-year mortgage rate was little changed near the lowest level in over a year this week, as signs of cooling inflation have held down the Treasury bond yields used in setting home loan costs.
The 30-year fixed-rate mortgage averaged 6.49% during the week ending August 15, up fractionally from 6.47% in the prior week, the lowest since May 2023, mortgage finance agency Freddie Mac said on Thursday.
“In 2023, the 30-year fixed-rate mortgage nearly hit 8 percent, slamming the brakes on the housing market," Freddie Mac Chief Economist Sam Khater said in a statement.
"Now, the 30-year fixed-rate hovers around 6.5 percent and will likely trend down in the coming months as inflation continues to slow. Lower rates are good news for potential buyers and sellers alike.”
It averaged 7.09% during the same period a year ago.
Mortgage applications increased by nearly 17 percent last week as mortgage rates continued to fall, Mortgage Bankers Association data showed on Wednesday, enticing homeowners who had bought with high-rate mortgages in the last year to rush to refinance those loans.
"The significant increase was led by a 35 percent jump in refinances and also included a 3 percent increase in purchase applications. While the refinances remain strong, we expect that the purchase market will continue to gain momentum as mortgage rates continue to fall,” MBA Chief Executive Bob Broeksmit said in a statement.
Analysis:
The current state of mortgage rates is at a near all-time low, making it an opportune time for potential buyers and sellers in the housing market. With rates hovering around 6.5%, this is a significant drop from previous years where rates nearly hit 8%. This decrease in rates is attributed to slowing inflation, which has kept Treasury bond yields low, ultimately influencing home loan costs.
As a result of the favorable rates, mortgage applications have seen a substantial increase, particularly in refinances. Homeowners who previously had high-rate mortgages are now rushing to refinance at these lower rates. This surge in refinances, along with a slight increase in purchase applications, indicates a positive trend in the housing market.
Overall, the current mortgage rate environment presents a promising opportunity for both buyers and sellers to make significant financial gains. By taking advantage of these historically low rates, individuals can potentially save money on their mortgage payments or secure a better deal when buying or selling a home.