Mortgage rates this week dipped to just under 6.50% for the 30-year term, the lowest average recorded since 2023.
The average contract rate on a 30-year mortgage, the most popular home loan in the United States, fell to 6.46% in the week ending Aug. 22. That is 0.03% lower compared to last week, and 0.77% lower compared to the same week in 2023, according to Freddie Mac's Primary Mortgage Market Survey. It is the lowest level recorded since May 2023.
The average rate on a 15-year mortgage also fell this week, settling at 5.62%. That is 0.04% lower than last week's rate of 5.66% and 0.93% lower than last year's 6.55%.
Mortgage rates began soaring in early 2022 after the Federal Reserve hiked its benchmark rate in an effort to combat inflation. In October 2023, mortgage rates rose to 8%, a level not seen in two decades.
Mortgage rates have fallen since and are likely to continue declining through the end of the year, per a prediction from Sam Khater, chief economist at Freddie Mac. The prediction could stem from expectations that the Fed will cut its rates in September. A Fed rate cut could indirectly influence mortgages to fall.
"Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year," he said.
US Existing Home Sales Rise
Despite the recent dip in mortgage rates, borrowing costs remain twice as high as pre-pandemic levels. However, data suggests home buyers are now starting to respond to the declines. Existing-home sales for July rose to a seasonally adjusted annual rate of 3.95 million units, which is 1.3% higher than last month.
The figures were above expectations. It was also the first time home sales improved following four consecutive monthly declines, the National Association of Realtors (NAR) reported Thursday. Despite this, sales were still 2.5% lower compared with the same time last year.
First-time home buyers were responsible for 29% of all sales recorded in July while individual investors or second-home buyers made up 13%.
All sales were based on contracts likely signed in May and June.
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