WASHINGTON–Mortgage rates dipped again last week to another recent new low, and some expect even bigger decreases are in line over the coming months. So far, the decline has not led to a significant boost in home buying.
According to Freddie Mac, the average rate on 30-year mortgages declined slightly to 6.46% last week, slightly below the 6.49% average of one week earlier, but the lowest level since May 2023.
Quick Ride Up
As every credit union mortgage lender knows, mortgage rates were as low as 3% in late 2021 before climbing in concert with moves by the Federal Reserve to boost the fed funds rate as it sought to limit inflation. It was above 7% for portions of 2024. The 30-year rate has been steadily easing since April, when it rose above 7%.
“We expect rates likely will need to decline another percentage point to generate buyer demand,” Freddie Mac Chief Economist Sam Khater said in a statement.
Such a decline is likely, given the Fed’s indication last week that a rate cut is very likely when it meets in September (see related story).
Complicating Factor
According to the National Association of Realtors, existing-home sales rose above expectations in July after four consecutive monthly declines, lifting sales to a seasonally adjusted annual rate of 3.95 million units.
Existing home sales remain 2.5% below 2023.
Another complicating factor: the median existing-home owner has a rate below 4%, according to Redfin.