Mortgage rates fell to their lowest level in more than a year, boon to the struggling housing market.
The average interest rate on a 30-year fixed-rate loan fell to 6.47% this week, down from 6.73% last week, according to a survey conducted by mortgage broker Freddie Mac.
At the same time last year, the average 30-year interest rate was 6.96%.
This marks the second consecutive week of declines in the average rate and the lowest level since 6.39% in mid-May last year.
Borrowing costs for 15-year fixed-rate mortgages, popular among homeowners looking to refinance their mortgages, also fell this week, with the average rate dropping to 5.63% from 5.99% last week.
A year ago, the average was 6.34 percent, according to Freddie Mac.
As the Federal Reserve has raised interest rates to combat stubbornly high inflation, mortgage rates have also risen.
Last week, Fed Chairman Jerome Powell said the Fed would keep its key interest rate unchanged at 5.3%, its 23-year high, but said a rate cut “may be on the table” at the central bank’s next meeting on Sept. 17-18.
Rising interest rates are putting a damper on the property purchasing plans of first-time homebuyers.
Homeowners who bought properties with mortgages before the pandemic and have been living in them are paying much lower interest rates and are therefore less likely to put their homes on the market.
This limited supply and caused home prices to skyrocket.
“Lower mortgage rates should increase prospective homebuyers’ purchasing power and begin to express interest in purchasing,” Sam Carter, chief economist at Freddie Mac, told The Associated Press.
“In addition, these lower interest rates are already creating refinancing opportunities for some existing homeowners.”
Falling mortgage rates, combined with signs of easing inflation, are raising expectations that the Fed will cut interest rates next month.
With post wire
