The average rate on a 30-year mortgage in the U.S. fell this week to its lowest level in 19 months, dropping to 6.20% from 6.35% the previous week. This decline is attributed to a pullback in Treasury yields ahead of an expected interest rate cut from the Federal Reserve next week. Mortgage rates are influenced by various factors, including the bond market’s reaction to Fed interest rate policy decisions.
Additionally, borrowing costs on 15-year fixed-rate mortgages also decreased this week, with the average rate falling to 5.27% from 5.47% the previous week. Despite the improving mortgage rate environment, prospective buyers are still hesitant due to high house prices and supply shortages.
The elevated mortgage rates, which have more than doubled in the past three years, are deterring many potential homebuyers and prolonging the nation’s housing slump into its third year. Sales of previously owned U.S. homes are below last year’s level, though they showed a slight improvement in July as buyers took advantage of more attractive mortgage rates.
Freddie Mac’s chief economist, Sam Khater, stated that rates are softening due to calmer economic data, but challenges remain for buyers. The bond market’s anticipation of a Fed rate cut has contributed to the decline in mortgage rates. The 30-year mortgage rate is now at its lowest since February 2023, with the expectation of further decreases following the Fed’s upcoming rate decision.
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