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Mortgage rates fell to their lowest level in over a year, a welcome development for the housing market. The average rate on the 30-year fixed-rate mortgage dropped to 6.47% from 6.73% last week, Freddie Mac reported on Thursday.
A year ago, the average rate on a 30-year fixed-rate loan was 6.96%. Expectations that the Federal Reserve will cut interest rates in September have caused long-term bond yields to fall, which in turn has pushed mortgage rates downward.
The drop in rates has also been a positive development for prospective homebuyers facing affordability issues. Home prices hit a new high in June, but the rate of existing home sales slowed, and there are signs the market is turning back in favor of buyers over sellers. "Supply and demand dynamics are nearing a balanced market condition," NAR chief economist Lawrence Yun said last month. "We're seeing a slow shift from a seller's market to a buyer's market."