Mortgage rates fall to lowest level in more than a year

Mortgage rates have fallen to their lowest level in more than a year, a welcome development for the housing market.

The average interest rate on a 30-year fixed mortgage fell to 6.47% from 6.73% last week, Freddie Mac Report Thursday. A year ago, the average interest rate on a 30-year fixed loan was 6.96%.

Separately, the average interest rate on a 15-year fixed mortgage was 5.63%, down from 5.99% the week before. The interest rate on a 15-year loan was 6.34% a year ago.

“Mortgage rates fell this week… in the wake of a likely overreaction to a poor jobs report and financial market turmoil for an economy that remains on solid footing,” Sam Khater, chief economist at Freddie Mac, said in a press release.

“Lower mortgage rates increase the purchasing power of potential home buyers and should start to pique their interest in making a move,” the economist added.

Read more: Mortgage and Refinance Rates Today August 8, 2024: It Might Be a Good Time to Refinance

Expectations that the Federal Reserve will cut interest rates in September have caused long-term bond yields to fall, which in turn has pushed mortgage rates lower.

Read more: Is this the right time to buy a home?

The price decline was also a positive development for potential homebuyers facing affordability issues. Home prices reached New high in JuneBut existing home sales have slowed, and there are signs that the market is beginning to shift in favor of buyers over sellers.

“Supply and demand dynamics are approaching a balanced market,” Lawrence Yun, chief economist at the National Association of Realtors, said last month. “We are slowly transitioning from a seller’s market to a buyer’s market.”

As the housing market enters a slowdown in the year, buyers remain on the sidelines. Home Loan Applications It rose by only 1% last week despite falling prices. It was 11% lower than last year.

Read more: Is this the right time to buy a home?

“Despite the downward movement in prices, purchasing activity saw only small gains, with the increase in traditional purchase orders being offset by a decline in government purchase orders,” Joel Kahn, vice president and deputy chief economist at the Mortgage Bankers Association, said in a news release.

“Inventory for sale is gradually starting to rise in some parts of the country, and homebuyers may be waiting for the right time to enter the market given the potential for lower prices,” Kahn said.

Analysts at Goldman Sachs, led by Vinay Viswanathan, this week revised up their forecasts for rising home prices as interest rates fall. The firm now expects home prices to rise 4.5% this year and 4.4% next year, up from a previous forecast of 4.2% this year and 3.2% next year.

The story continues

Meanwhile, more homeowners are taking advantage of the opportunity to refinance their loans as rates fall, with home loan refinance applications up 16% last week compared to the previous week, The Mortgage Bankers Association said.

Dani Romero is a reporter at Yahoo Finance. You can follow her on X @dannyromerotv.

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