Freddie Mac Reports Decline in Mortgage Rates

Mortgage buyer Freddie Mac released its latest findings on Thursday, highlighting a decrease in the average rate for benchmark 30-year fixed mortgages, which has dropped to 6.5% from last week’s 6.56%. The average over the past week has been around 6.44%, which, honestly, is a slight improvement since October 17, 2024. Just to put that in perspective, this time last year, the rate stood at 6.35%.

Interestingly, as affordability shrinks, only about 28% of homes are currently within reach for the average American household. It’s a stark reminder of the challenges many are facing right now.

According to Sam Carter, Freddie Mac’s chief economist, mortgage fees are seeing a decline, which seems to promote optimism among both new buyers and existing homeowners. He noted that opportunities for refinancing are increasing as fees drop. In fact, the share of mortgage applications for refinancing has climbed to nearly 47%, the highest it’s been since October.

Efforts to Address Housing Affordability

In other news, the Treasury Department is focusing on the housing affordability crisis as a major priority this fall. Meanwhile, the average rate for 15-year fixed mortgages has also dipped—now at 5.6%, down from last week’s 5.69%. A year earlier, it was around 5.47%.

A recent report from Realtor.com indicates that the U.S. housing market remains a challenge for average earners. As of August, only 28% of homes were deemed affordable, and the price threshold for middle-income households has dropped to about $298,000—down from $325,000 in 2019. It’s disheartening to see that, even with a 15.7% rise in median income, the purchasing power has decreased significantly over the years.

Daniel Hale, chief economist at Realtor.com, addressed the impact of high mortgage rates on purchasing power, noting that even with rising incomes, the effect of interest rates continues to place a strain on typical households.