Mortgage Rates Falls: On Friday, Mortgage News Daily reported that mortgage rates have dropped significantly. The average rate on a 30-year fixed mortgage went down by 22 basis points to 6.4%.
Last week, the mortgage rate on a 30-year fixed mortgage was 6.78%, this is the lowest ever hit since April 2023.
Meanwhile, the 15-year fixed mortgage rate went down to 5.89% which is the lowest it has ever hit since early May 2023.
After the monthly job report was released on August 2 that was worse than expected, the bond yields fell quickly which also led to the fall in mortgage rates.
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Another reason behind the drop in mortgage rates could be because of low inflation and the expectation that the Federal Reserve will cut the interest rates in September.
Matthew Graham, who is the head officer at Mortgage News Daily said, “Between [Federal Reserve Chair Jerome] Powell’s equivocal openness to ‘multiple cuts’ in 2024 on Wednesday and this morning’s sharply weaker jobs report (something Powell didn’t even know about on Wednesday), the more aggressive rate cut narrative is quickly coming into focus.”
CNBC TV 18 reported that Matthew Graham added that before the Federal Reserve meeting in September, there were still two inflation reports and one jobs report left.
Mortgage News Daily’s head offer further said, “If they don’t offer strong counterpoints to recent data, the rate cut cycle has not only begun, but it will likely involve a certain sense of urgency.”
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The last hike in 30-year fixed mortgages was in April at 7.52% and since then house sales have dropped significantly. Buyers were facing a lot of difficulties not only because of the high interest rates but also because of the high house prices and lack of supply.
Since then, supply has improved, but prices are still too high.
For example, in April when the mortgage rates were high, if a buyer was buying a house for $400,000 with a 20% down payment and a 30-year fixed mortgage then the buyer had to pay around $2,240 monthly payment without any insurance and property taxes.
But now as the mortgage rates are lower, the buyer only has to pay $2,000 as monthly payments and more buyers will be able to get loans at lower interest rates.
The mortgage applications to buy a home are about 15% which is lower than last year in the same period.
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