Mortgage rates edged lower this week, with the average 30-year fixed-rate mortgage dipping to 6.58% from 6.63% a week ago—the lowest since late last October. A year ago, the rate stood at 6.49%. The 15-year fixed-rate mortgage also declined, averaging 5.71% this week (down from 5.75%); a year ago it was 5.66%. Freddie Mac reported the figures.
The rate dip comes as lenders weigh influences from the broader economy, including the behavior of the bond market and inflation data. The 10-year Treasury yield, a key proxy for mortgage pricing, hovered around 4.29% at mid-day, slightly higher than the previous session’s 4.24%.
Economists say the recent slide in mortgage costs has been helped by prospects that the Federal Reserve could cut its key rate later this year, following softer-than-expected July job data. Still, inflation remains a wildcard: a hotter-than-forecast batch of wholesale prices last month suggested persistent price pressures that could push bond yields higher and, in turn, mortgage rates back up.
Industry forecasters generally expect the 30-year rate to stay above 6% for the year. Projections from Realtor.com and Fannie Mae put the average near 6.4% by year-end. Even with rate relief, affordability remains a hurdle for many buyers, even as price growth cools nationally and more homes appear on the market in some regions such as the Sun Belt and the West.
Prices and demand context: the national median price for a previously occupied home rose to a record $435,300 in June, underscoring the impact of high financing costs on buyer purchasing power. On the other hand, rate relief has given some momentum back to the market. Joel Berner, senior economist at Realtor.com, noted that buyers sidelined by high financing costs gained some encouragement in recent weeks, though it remains to be seen whether that translates into stronger demand.
Refinancing and loan activity trends: refinance demand has surged as rates declined, with mortgage applications up 10.9% for the week. Refinance applications accounted for nearly 47% of all mortgage activity, and the share of refinance applications rose 23% from the prior week—the strongest showing since April. Adjustable-rate mortgages also rose, up 25% to their highest level since 2022. Cash-out refinancings climbed to a nearly three-year high in the April-June quarter as homeowners tapped equity built up during years of rising home values.
What this could mean for readers planning to buy or refinance
– If you’re in the market for a home, a drop in rates can improve monthly payments and borrowing power, especially for new buyers and those able to lock in a rate now.
– Homeowners considering refinancing may find more options and potential savings, particularly if they qualify for a shorter term or a cash-out plan, though the pace will depend on ongoing inflation trends and next steps from the Fed.
– Prices remain elevated in many markets, so combining rate relief with careful budgeting and a clear plan for down payment and closing costs is crucial.
Additional notes and outlook
– Inflation data released recently showed wholesale prices up 3.3% year over year, above expectations and signaling that inflation could stay sticky. Consumer prices rose 2.7% in July from a year earlier, unchanged from June. If inflation remains firmer, bond yields and mortgage rates could resume higher pressure even if the Fed cuts rates later this year.
– Market watchers expect rates to hover above recent lows for the remainder of the year, but the degree of movement will hinge on inflation trajectories, labor market data, and Fed policy signals.
Overall, the decline in mortgage rates offers a glimmer of relief for homebuyers and homeowners with rate-sensitive plans, even as affordability challenges and elevated home prices continue to shape the housing landscape. A positive outlook for the months ahead depends on inflation trends, consistent job data, and how supply responds in key markets.
Commentary: The fortuitous timing of rate relief could help energize a sluggish housing market, but buyers should remain prudent, run the numbers carefully, and consider long-term affordability beyond the immediate monthly payment.
Summary: Mortgage rates have moved lower for a fourth straight week, easing buying power challenges somewhat and boosting refinance activity, while inflation and price dynamics keep the longer-term outlook cautiously uncertain.