The average rate on a 30-year mortgage fell this week to its lowest level in more than a year, a welcome affordability boost for prospective homebuyers and homeowners looking to refinance their home loan to a lower rate
The average rate on a 30-year mortgage fell this week to its lowest level in more than a year, a welcome affordability boost for prospective home shoppers and homeowners looking to refinance their home loan to a lower rate.
The rate fell to 6.47% from 6.73% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.96%.
This is the second straight weekly drop in the average rate. It’s 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.
“The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move,” said Sam Khater, Freddie Mac’s chief economist. “Additionally, this drop in rates is already providing some existing homeowners the opportunity to refinance.”
After jumping to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has mostly hovered around 7% this year — more than double what it was just three years ago.
The elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, extending the nation’s housing slump into its third year.
Sales of previously occupied U.S. homes fell in June for the fourth month in a row. And sales of new single-family homes fell last month to the slowest annual pace since November.
Rates have mostly eased in recent weeks as signs of easing inflation and a cooling job market have raised expectations that the Federal Reserve will cut its benchmark interest rate next month.
The Average Rate on a 30-Year Mortgage Drops to 6.47%, Reaching the Lowest Level in Over a Year
For prospective homebuyers and current homeowners looking to refinance, there is good news on the horizon. The average rate on a 30-year fixed-rate mortgage has dropped to 6.47%, reaching the lowest level in over a year. This significant decrease in mortgage rates presents an excellent opportunity for individuals to secure a more affordable loan and potentially save thousands of dollars over the life of their mortgage.
The drop in mortgage rates can be attributed to several factors, including the Federal Reserve’s decision to keep interest rates low in response to the ongoing economic uncertainty caused by the COVID-19 pandemic. Additionally, market conditions, such as inflation concerns and geopolitical tensions, have also played a role in pushing mortgage rates lower.
For homebuyers, the lower mortgage rates mean that they can afford a more expensive home or lower their monthly payments on a more affordable property. This can make homeownership more accessible for first-time buyers or those looking to upgrade to a larger home. Additionally, current homeowners who are considering refinancing their existing mortgage can take advantage of the lower rates to potentially reduce their monthly payments or shorten the term of their loan.
It is important for individuals to act quickly if they are interested in taking advantage of the current low mortgage rates. While rates are currently at historic lows, they are subject to change based on market conditions and economic factors. By locking in a low rate now, borrowers can secure a more favorable loan and save money over the long term.
To determine if refinancing or purchasing a home with a lower mortgage rate is the right decision, individuals should consult with a trusted mortgage lender or financial advisor. These professionals can provide guidance on the best course of action based on an individual’s financial situation and goals.
In conclusion, the drop in the average rate on a 30-year fixed-rate mortgage to 6.47% presents an excellent opportunity for individuals to secure a more affordable loan and potentially save money over the life of their mortgage. By taking advantage of these historically low rates, homebuyers and current homeowners can make their dream of homeownership more attainable and financially beneficial.
