This week, the 30-year fixed-rate mortgage averaged 6.35%, and some economists predict rates may continue to decrease in the coming weeks. Last week, Federal Reserve Chair Jerome Powell hinted that a rate cut could be on the horizon, stating that “the time has come for policy to adjust,” with an interest rate reduction likely at the Fed’s mid-September meeting.
“Mortgage rates dropped again this week due to expectations of a Fed rate cut,” says Sam Khater, chief economist at Freddie Mac. “While rates are projected to decline further, potential home buyers are waiting for more substantial decreases before making a move, leaving purchase activity subdued for now.”
Current mortgage rates are notably lower than they were a year ago, when they averaged 7.18%. This decrease could lead to significant savings in borrowing costs compared to last year. For instance, at the current 6.35% rate, the monthly mortgage payment on a $400,000 home (assuming a 20% down payment) would be $1,991, according to Jessica Lautz, deputy chief economist at the National Association of REALTORS®.
“This is the lowest mortgage rates have been in the past 15 months,” Lautz says. “This shift improves housing affordability for buyers. For those who considered a mortgage at last October’s peak rate of 7.79%, the payment would have been $2,301. Now, at 6.35%, buyers could save $310 per month or $3,720 annually.”
Despite the recent dip in rates, some home buyers are holding out for even lower figures. Although mortgage rates have decreased in recent weeks, applications for home purchases only saw a modest 1% increase and remain 9% lower than a year ago, according to the Mortgage Bankers Association.
“With rates trending downward and for-sale inventory beginning to rise, prospective home buyers are exercising patience,” says Joel Kan, MBA’s deputy chief economist.
This Week’s Mortgage Rates
Freddie Mac reported the following national averages for the week ending August 29:
- 30-year fixed-rate mortgages: averaged 6.35%, down from last week’s 6.46%. A year ago, they averaged 7.18%.
- 15-year fixed-rate mortgages: averaged 5.51%, down from last week’s 5.62%. A year ago, they averaged 6.55%.
