According to nar.realtor, mortgage rates are starting to decline as the Federal Reserve hints at a possible rate cut in September. Freddie Mac reports that the 30-year fixed-rate mortgage averaged 6.35% this week, with economists predicting further decreases in the coming weeks. The announcement from Federal Reserve Chair Jerome Powell that "the time has come for policy to adjust" suggests that an interest rate cut is likely during the Fed’s mid-September meeting.
Sam Khater, Freddie Mac’s chief economist, notes that “mortgage rates fell again this week due to expectations of a Fed rate cut.” However, while potential homebuyers are closely monitoring these changes, a significant increase in purchase activity is unlikely until rates drop even further.
Currently, mortgage rates are significantly lower than they were a year ago, when the 30-year fixed-rate mortgage averaged 7.18%. This drop in rates could result in substantial savings for homebuyers. For instance, at this week’s 6.35% average rate, a monthly mortgage payment on a $400,000 home with a 20% down payment would be approximately $1,991. In comparison, at last year’s high of 7.79% in October 2023, the monthly payment would have been $2,301, a difference of $310 per month or $3,720 annually, as explained by Jessica Lautz, deputy chief economist of the National Association of REALTORS®.
“This is the lowest mortgage interest rates have dropped in the past 15 months,” Lautz says. “This improvement in rates significantly enhances housing affordability for potential buyers.”
Despite these positive changes, some homebuyers remain cautious, hoping for even lower rates. The Mortgage Bankers Association (MBA) reports that mortgage applications for home purchases only saw a slight 1% increase recently and are still 9% lower than they were a year ago.
Joel Kan, MBA’s deputy chief economist, says, “Prospective homebuyers are staying patient now that rates are moving lower and for-sale inventory has started to increase.”
If you're considering buying or selling a home, now may be the right time to act as mortgage rates continue to trend downward. Contact Benson Group today to explore your options and make the most informed decision for your real estate needs. ----------
Source: nar.realtor
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