The interest rate for the most popular home loan in the United States has dropped to its lowest level in over a year, following signals from Federal Reserve Chair Jerome Powell that the central bank might lower borrowing costs soon to prevent further weakening of the job market.
US Mortgage Rates Drop Again to Lowest Level Since April 2023 https://t.co/HPJ3UauMuU
— Genia Turanova 🌻 (@GTuranova) August 28, 2024
The Mortgage Bankers Association (MBA) reported on Wednesday that the average rate for a 30-year fixed-rate mortgage decreased by 6 basis points to 6.44% for the week ending August 23. This marks the lowest level since April 2023. Over the past four weeks, mortgage rates have fallen by 38 basis points, which has encouraged homeowners who purchased their homes when rates were higher to refinance for lower monthly payments. The MBA’s 30-year average rate peaked at 7.9% last October.
Despite the decline in mortgage rates, applications for new mortgages and purchases saw only modest increases, rising by just 0.5% and 1%, respectively. Many potential homebuyers are still waiting, hoping for rates to drop even further.
Interest-rate futures markets are currently reflecting bets that the Federal Reserve will reduce short-term rates by a full percentage point by the end of this year. This potential rate cut is seen as a move to stimulate economic activity by making borrowing cheaper, which could help support the housing market and overall economic growth.
US rates for 30-year fixed-rate mortgages decreased to 6.44% this week, the lowest since 2023. 🏡
That represents a more than 80bps drop in the last year ahead of expected easing, per TE. pic.twitter.com/RWh55jGwoW
— OnlyFlows (@OnlyFlowsApp) August 28, 2024
However, rising borrowing costs and a limited supply of new and existing homes have made homeownership less affordable for many Americans. Both Democratic presidential nominee Kamala Harris and her Republican opponent Donald Trump have emphasized the importance of housing affordability in their campaigns for the upcoming November presidential election, each proposing different strategies to lower housing costs for Americans.
Key Points:
i. The average 30-year fixed-rate mortgage in the US dropped to 6.44%, the lowest since April 2023.
ii. The decrease in rates has spurred refinancing as homeowners seek lower monthly payments.
iii. Despite the lower rates, new mortgage and purchase applications saw only slight increases.
iv. Market expectations suggest the Federal Reserve may cut interest rates by a full percentage point by the end of the year.
v. Rising borrowing costs and limited home availability have made homeownership more challenging, prompting presidential candidates to address housing affordability in their campaigns.
Susan Guglielmo – Reprinted with permission of Whatfinger News
