Mortgage rates fell to their lowest level in more than a year in a welcome sign for the beleaguered housing market.
The average rate on a 30-year fixed-rate loan fell this week to 6.47% — down from 6.73% last week, according to a survey conducted by mortgage broker Freddie Mac.
At this time last year, the average 30-year rate stood at 6.96%.
It was the second straight weekly drop in the average rate, which is now the lowest it’s been since mid-May last year when it was 6.39%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell this week, pulling the average rate down to 5.63% from 5.99% last week.
A year ago, it averaged 6.34%, Freddie Mac said.
Mortgage rates have increased in conjunction with the Federal Reserve hiking interest rates to combat stubbornly high inflation.
Last week, Fed Chair Jerome Powell said that the Fed would keep its key interest rate unchanged at a 23-year-high of 5.3% — but said cuts “could be on the table” when the central bankers next meets Sept. 17-18.
The higher rates have impeded plans by would-be, first-time homeowners to buy property.
Homeowners who have been living in properties that were purchased with mortgages from the pre-pandemic period are paying rates that are much lower — thus making them less likely to put their homes on the market.
This has led to limited supply — causing housing prices to spike.
“The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move,” Sam Khater, Freddie Mac’s chief economist, told AP.
“Additionally, this drop in rates is already providing some existing homeowners the opportunity to refinance.”
The lower mortgage rates coupled with signs of easing inflation have stoked expectations that the Fed will slash interest rates next month.
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