Mortgage rates have dropped to the lowest point since last October.
The weekly average in the U.S. for a 30-year fixed-rate mortgage fell to 6.58% as of Thursday, the Federal Home Loan Mortgage Corporation, better known as Freddie Mac, reported. That’s down 0.05 percentage points from the week ending Aug. 7.
“Mortgage rates continue to decline,” a post on the Freddie Mac site declared. “Mortgage rates fell to their lowest level since October. Purchase application activity is improving as borrowers take advantage of the decline in mortgage rates.”
The decline follows last week’s 0.09 percentage points decline to a weekly average of 6.63%, attributed to a worse than anticipated jobs report that sparked a drop in the 10-year Treasury bond yield that’s closely tied to home loan rates.
This week’s 10-month low for mortgage rates means a homebuyer with a $3,000 monthly budget has roughly $20,000 more purchasing power since rates hit a high of 7.08% in May, the online brokerage Redfin posted Thursday.
It’s the 12th week in a row that the nation’s median monthly mortgage payment either fell or remained flat, Redfin said. During the four weeks ending Aug. 10, the median monthly mortgage payment reached $2,631, the lowest in seven months and $200 less than May’s peak.
At the same time, though, Redfin pointed out median home prices are creeping up, hitting $396,000 during the four weeks ending Aug. 10, a 2.1% increase year over year. It marked the fifth straight week that prices climbed after hitting a two-year low in early July.
The advice from Redfin’s head of economics research, Chen Zhao?
Don’t expect mortgage rates to get lower, even if the Federal Reserve does cut interest rates next month.
“The mortgage rates that buyers can lock in today have already priced in the likelihood that the Fed will cut rates on Sept. 17,” she said. “That means that mortgage rates are unlikely to drop any further when the Fed actually makes the expected cut.”
Zhao also warned that rates may not stay as low as they are now for long.
“The window to snag a mortgage rate in the mid-6s may be limited,” she said. “Increased rate volatility is expected in coming weeks as new economic data is released.”
Mortgage New Daily showed rates rising slightly Thursday, to 6.56%, a 0.03 percentage point increase from Wednesday.