The typical rate for a 30-year mortgage has fallen again to 5.71%, down from 5.75% last week. That’s tied for the lowest 7-day moving average since October 24, 2022, when the weekly rate was 6.54%. The new rate is a sharp drop from a year ago, when it was 6.49%.
Even still, as mortgage rates come down further, applications for home loans jumped last week. Mortgage applications surged by 10.9% last week over the previous week, thanks in large part to the falling interest rates on mortgages. Specifically, applications for adjustable-rate mortgages (ARMs) jumped 25%, marking the highest share since 2022. Refinance applications refinanced 23 percent higher than the previous week. That represents the highest week of refinance requests since April.
In fact, economists already expect that the average rate on a 30-year fixed mortgage lifts over 6% for the whole year. The recent decline in rates hasn’t made a dent in re-energizing the U.S. housing market. High mortgage rates have maintained a downward pressure on sales that have been in decline since earlier in 2022. With home sales dropping last year to their lowest levels in almost three decades, that at least sounds plausible.
This drop in mortgage rates continues as the financial world has been volatile, with the likelihood of a government shutdown. As of midday Thursday, the yield on the 10 year Treasury bond was 4.29%. That’s up from 4.24% late Wednesday. This yield has been mostly down over the past two weeks. Weaker-than-expected job market data for July has fueled speculation that the Federal Reserve may consider cutting its main short-term interest rate next month.
Joel Berner, senior economist at Realtor.com, weighed in on what the recent jump in mortgage rates means for affordability and homebuyer demand.
“Homebuyers who have been relegated to the sidelines by high financing costs got some encouragement in the past two weeks, but it remains to be seen if it’s enough to get more of them back in the game.” – Joel Berner, Realtor.com
