US 30-year mortgage rates hit lowest point since April ’23

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By Yomna Yasser

The average interest rate for the US popular 30-year fixed-rate mortgage in the United States dropped to its lowest level in 16 months, following Federal Reserve Chair Jerome Powell’s indication of potential rate cuts to support the job market.

According to the Mortgage Bankers Association (MBA), the average contract rate on a 30-year fixed-rate mortgage decreased by 6 basis points to 6.44 per cent in the week ending August 23. This marks the lowest rate since April 2023.

“Mortgage rates declined for the fourth consecutive week, with the 30-year fixed rate at 6.44 percent, the lowest since April 2023. Rates have now come down more than 80 basis points from a year ago,” stated Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“Mortgage applications were slightly higher, driven by marginally stronger purchase activity. Refinance applications were essentially unchanged but are still 85 percent higher than last year as borrowers continue to act – particularly FHA and VA borrowers.
“As observed in recent weeks, despite lower rates, purchase applications have not moved much. Prospective homebuyers are staying patient now that rates are moving lower and for-sale inventory has started to increase.”

The decline in mortgage rates, totaling 38 basis points over the past four weeks, has spurred a surge in refinancing applications. Homeowners who purchased properties at higher interest rates are seeking to lock in lower monthly payments. The MBA’s 30-year average rate reached a peak of 7.9 per cent last October.

While mortgage applications and purchase applications saw slight increases of 0.5% and 1%, respectively, potential homebuyers are likely waiting for further interest rate reductions.

Interest rate futures indicate that the Federal Reserve is expected to cut short-term rates by a full percentage point by the end of the year.

Rising borrowing costs and a limited supply of new and existing homes have made homeownership increasingly challenging for many Americans. Both Democratic presidential nominee Kamala Harris and Republican rival Donald Trump have made housing affordability a key issue in their campaigns, proposing different strategies to reduce costs for American families.

Attribution: US Mortgage Bankers Association (MBA)

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