This week, the average interest rate for U.S. mortgages fell to its lowest level in nearly a year, reflecting a pullback in the treasury yield, which is based on the expected reduction in interest rates. Fed next week.
Mortgage buyer Freddie Mac said Thursday that long-term interest rates fell from 6.5% to 6.35% starting last week. A year ago, the interest rate averaged 6.2%.
Borrowing fees for 15-year fixed-rate mortgages are also popular, with homeowners refinancing their home loans. Starting last week’s 5.6%, the average interest rate fell to 5.5%. A year ago, it was 5.27%, Freddie Mac explain.
Mortgage interest rates are affected by several factors, from The Federal Reserve The decision-making of interest rate policy is on the expectations of market investors for the economy and inflation.
The rates have been falling since late July because Fed Its benchmark short-term interest rate will be lowered for the first time next week at a central bank meeting.
and Fed Without a mortgage interest rate set, its actions can affect bond investors’ demand for long-term government bonds, such as the 10-year Treasury note. Lenders use yields as a guide to pricing home loans on 10-year Treasury bills. The yield is 4%, Thursday afternoon.
this Fed It has been keeping its main interest rate on hold this year as it is more concerned about the potential worsening of inflation due to President Donald Trump’s tariffs rather than the job market.
But in the highly anticipated speech last month, Fed Chairman Jerome Powell said the central bank could lower interest rates in the coming months following its July work report, including massive downward revisions in June and May.
Recent job market data have sparked speculation that central banks may be ready to lower interest rates. The Department of Labor said last week that the economy added only 22,000 jobs in August. On Tuesday, government revised work data showed that the U.S. job market was much weaker than previous data last year.
Meanwhile, the latest weekly snapshot of the Unemployment Benefit Claims shows that more U.S. workers applied for unemployment benefits last week, indicating that the number of layoffs may increase.
The housing market has been in a downturn since the mortgage rate began to rise from its historical lows in 2022. Sales have remained slow so far, as the average interest rate on 30-year mortgages mostly hovered above 6.5%.
The average interest rate is now at its lowest level since October 10.
A similar callback occurred last year in the weeks last year Fed Interest rate policy meeting in September. That’s Fed Its key interest rates have been lowered for the first time since March 2020 in the early days of the pandemic. At that time, the average interest rate on 30-year mortgages fell to a 2-year low of 6.08%, but soon after climbing again in the early hours, it reached more than 7% by mid-January.
In view of expectations for A, mortgage rates may follow a similar trajectory Fed Tax cuts have already lowered mortgage rates.
“We should not expect interest rates to drop further, in fact, mortgage rates may actually be in Fed Cut. ” said Lisa Sturtevant, chief economist at Bright MLS.
Currently, the recent mortgage rate pullback for many potential homebuyers and homeowners eager to refinancing is encouraging.
Last week, mortgage applications include loans to purchase a home or existing mortgage loans, jumped to a three-year high last week, according to the Mortgage Bankers Association.
Applications for mortgage loans accounted for nearly 50% of all applications last week, as homeowners whose mortgage rates soared in recent years seized the opportunity to lower their monthly home loan payments.
If mortgage rates continue to ease, homebuyers will benefit from more affordable financing. But selling parties across the country have experienced more difficult times, and lowering mortgage rates may also introduce more buyers to make the market more competitive.
