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After several weeks of declines, mortgage rates reversed course this week, inching up slightly. Still, with the 30-year fixed-rate mortgage averaging 6.12%, according to Freddie Mac, borrowing costs remain well below a year ago, when rates surged above 7%. Prospective home buyers may want to stop holding out for lower rates, experts say.
“The decline in mortgage rates has stalled due to a mix of escalating geopolitical tensions and a rebound in short-term rates that indicate the market’s enthusiasm on rate cuts was premature,” says Sam Khater, Freddie Mac’s chief economist. “Zooming out to the bigger picture, mortgage rates have declined one-and-a-half percentage points over the last 12 months, home price growth is slowing, inventory is increasing, and incomes continue to rise. As a result, the backdrop for home buyers this fall is improving and should continue through the rest of the year.”
Applications for a mortgage to purchase a home rose 1% this week despite the slight increase in mortgage rates, the Mortgage Bankers Association reports. Mortgage applications—a gauge for future homebuying activity—are now 9% higher than the same week a year ago.
“Inventories of both new and existing homes have been increasing over the course of 2024, meaning that potential buyers have properties to look at and now have somewhat lower mortgage rates, leading to better affordability,” says Mike Fratantoni, chief economist at the MBA. Indeed, prospective buyers are finding more choices: The number of listings has jumped more than 20% compared to a year ago, the National Association of REALTORS® reports.
Freddie Mac reports the following national averages for mortgage rates for the week ending Oct. 3:
- 30-year fixed-rate mortgages: averaged 6.12%, rising from last week’s 6.08% average. Last year at this time, 30-year rates averaged 7.49%.
- 15-year fixed-rate mortgages: averaged 5.25%, increasing from last week’s average of 5.16%. A year ago, 15-year rates averaged 6.78%.
