The interest rate on the most popular U.S. mortgage fell to a 16-month low after Federal Reserve Chairman Jerome Powell signaled last week that the central bank is willing to cut borrowing costs next month to prevent the labor market from weakening further.
The average interest rate on 30-year fixed-rate mortgages fell 6 basis points in the week ended Aug. 23 to 6.44 percent, the Mortgage Bankers Association (MBA) said Wednesday. It was the lowest level since April 2023.
The 38-basis-point decline in mortgage rates in four weeks has kept applications for refinancing elevated, as homeowners who bought when rates were even higher have decided to lock in lower monthly payments. The average 30-year MBA rate hit a high of 7.9 percent last October.
Mortgage and purchase applications rose just 0.5 percent and 1 percent, respectively, as prospective homebuyers await a further drop in interest rates.
Interest rate futures reflect bets that the Federal Reserve will cut short-term interest rates by a percentage point over the course of the year.
Rising borrowing costs and a limited number of new and existing homes for sale have contributed to homeownership becoming increasingly out of reach for many.
Democratic presidential candidate Kamala Harris and her Republican rival Donald Trump have made housing affordability an integral part of their pitch to voters in November’s presidential election, with both promising to cut costs in different ways.
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– 2024-09-03 00:15:34
