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Prospective home buyers may be enticed to move forward on a home purchase as mortgage rates fall. The 30-year fixed-rate mortgage averaged 6.09% this week, down more than 150 basis points from earlier this year.
“Mortgage rates continued declining towards the 6% mark, reviving purchase and refinance demand for many consumers,” says Sam Khater, Freddie Mac’s chief economist.
Mortgage rates have been closely watched this week after the Federal Reserve’s announcement on Wednesday that it's cutting its short-term benchmark rate. “While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market,” Khater says. “Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but we expect rates to fall further, sparking more housing activity.”
As Khater suggests, some of that pent-up demand may already be getting unleashed: Mortgage applications to purchase a home jumped 5% as mortgage rates hit some of their lowest averages in about two years, according to the Mortgage Bankers Association’s latest index. “Home buyers are seeing improving affordability conditions, sparked by lower rates and slower home price growth,” says Joel Kan, an economist with the Mortgage Bankers Association.
Lower mortgage rates and more listings, which are up 23% from a year ago, could open up more opportunities for home buyers and lead to higher sales in the months ahead, says Lawrence Yun, chief economist at the National Association of REALTORS®.
Freddie Mac reports the following national averages as of Sept. 19:
- 30-year fixed-rate mortgages: averaged 6.09%, dropping from last week’s 6.2% average. A year ago, 30-year rates averaged 7.19%.
- 15-year fixed-rate mortgages: averaged 5.15%, decreasing from last week’s 5.27% average. Last year at this time, 15-year rates averaged 6.54%.
