Mortgage Rates Haven’t Been This Low in More Than a Year, Freddie Mac Says

Beleaguered homebuyers saw a bit of relief this week when mortgage rates slipped to their lowest levels in more than a year.

Data from government mortgage backer Freddie Mac showed that the average 30-year, fixed-rate mortgage was 6.47% as of Aug. 8, a drop of more than a quarter-percentage point from the prior week.

Big Weekly Declines Amid Stock Market Rout

This week’s decline was the steepest one-week drop since December, and it lowered home borrowing costs to levels not seen since May 2023. The 15-year, fixed-rate mortgage showed similar declines, falling nearly four-tenths of a percentage point to hit 5.63%, the lowest rate since April 2023.

The sudden drop in mortgage rates followed a disappointing jobs report that shook financial markets, sparking a major selloff and igniting speculation about when and how aggressively the Federal Reserve will begin cutting interest rates.

“Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing,” said Sam Khater, Freddie Mac chief economist. 

However, the slump may not last long. Mortgage rates are influenced by the 10-year Treasury yield, which tumbled on Monday to its lowest level in more than a year but has since rebounded. According to Zillow data analyzed by Investopedia, 30-year rates inched up in recent days to 6.49%.

Lower Rates Could Motivate Hesitant Homebuyers

The data comes as economists and real estate professionals have been searching for good news about the housing market. High mortgage rates have not only priced many buyers out of the market, but also kept many homeowners from moving, giving homebuyers fewer options and keeping prices elevated. 

“The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move,” Khater said. 

The data from Freddie Mac squared with a recent report from the Mortgage Brokers Association, which showed that refinancing surged last week as rates dropped. Freddie Mac’s data also showed homeowners were acting to refinance on the lower rates. 

“This drop in rates is already providing some existing homeowners the opportunity to refinance, with the refinance share of market mortgage applications reaching nearly 42 percent, the highest since March 2022,” Khater said.