Many Buyers Aren’t Jumping at Lower Mortgage Rates

Mortgage rates have fallen in recent weeks, but home buyers are showing restraint rather than rushing back into the housing market to snag a lower rate. ‘’

The 30-year fixed-rate mortgage averaged 6.47% this week, Freddie Mac reports.

Even as mortgage rates remain at their lowest level in more than a year, mortgage applications for home purchases remain mostly subdued. Applications increased just 1% in the latest week and are still down 11% compared to the same week a year ago, the Mortgage Bankers Association reports.

“Despite the downward movement in rates, purchase activity only saw small gains, with an increase in conventional purchase applications offset by decreases in government purchase applications,” says Joel Kan, deputy chief economist at the MBA. “For Sale inventory is beginning to increase gradually in some parts of the country, and home buyers might be biding their time to enter the market given the prospect of lower rates.”

Home buyers who are moving ahead are realizing savings, particularly compared to last fall when mortgage rates were averaging much higher. For example, at this week’s 6.47% average, a monthly mortgage payment—assuming a 20% down payment on a $400,000 home—would translate to about $2,016, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. However, in October 2023, when rates soared to a high of 7.79%, the monthly mortgage payment amounted to $3,420. That’s about $285 per month higher than this week’s rates, Lautz says.

“Mortgage rates are at their lowest weekly level since May 2023,” she adds. “This is the biggest one-week fall in mortgage interest rates in nine months. … Home buyers who stepped off to the sidelines while waiting for rates to fall: Rates have now fallen.”

The decline in mortgage rates should begin to tempt prospective home buyers and “pique their interest in making a move,” says Sam Khater, Freddie Mac’s chief economist. “Additionally, this drop in rates is already providing some existing homeowners the opportunity to refinance, with the refinance share of the mortgage applications market reaching nearly 42%—the highest since March 2022.”

Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 8:

• 30-year fixed-rate mortgages: averaged 6.47%, down from last week’s 6.73% average. A year ago, 30-year rates 6.96%.
• 15-year fixed-rate mortgages: averaged 5.63%, falling from last week’s 5.99% average. Last year at this time, 15-year rates averaged 6.34%.