Mortgage fees have reached a 10-month low, according to Freddie Mac’s latest report released Thursday. The average rate for benchmark 30-year fixed mortgages has dropped to 6.56%, down from last week’s 6.58%. Just a year ago, this figure stood at 6.35%.
With purchasing power shrinking, only 28% of U.S. homes are now deemed affordable for the average American family.
Sam Khater, Freddie Mac’s Chief Economist, mentioned that while many potential homebuyers face affordability challenges, these consistently low rates might encourage some to enter the market.
The average rate for 15-year fixed mortgages has remained steady at 5.69% since last week, compared to 5.51% a year ago. This news of lower rates is somewhat welcome, especially following a recent report highlighting housing affordability issues.
As of August, homes priced within the range for typical households have dropped significantly, with the most affordable homes for middle-income families now averaging around $298,000. This is down from $325,000 in 2019, yet median incomes have increased by 15.7% over that period.
Home prices soared to record highs in June, revealing which states are the priciest.
Daniel Hale, Chief Economist at Realtor.com, pointed out that even though incomes are rising, higher interest rates diminish the real purchasing power of everyday Americans.
According to a national housing report by Harvard University’s Center for Housing Research, soaring home prices and interest rates have knocked purchasing levels down to their lowest since the mid-1990s.
