U.S. Mortgage Rates Edge โDown to 5.52%
U.S. mortgage ratesโข experienced a slight decrease this week, falling to an average of 5.52%, according to โฃFreddie Mac. โThis is down from 5.53%โฃ the previous week โand substantially lower than the 5.63%โ recorded a year ago.
Thesโ rates are heavily influenced by factors including โฃdecisions made by โthe Federal Reserve โregarding interest rate policy,andโข the expectationsโ of โbond market investors concerning the economy and inflation. Mortgage rates generally track the 10-year Treasury yield, which currently sits at 4.02%โ as of midday Thursday – a decrease from approximatelyโ 4.14% at the same time last week.
The decline โin mortgage rates began in July,coinciding with theโ Federalโ Reserve’s decision in July โคto cut its mainโข interest rate for the first time in a year,a move promptedโฃ by concerns about the U.S. job market.โค At their September meeting,Fed officials โprojected two โฃfurther rate cuts thisโ year and one in 2026.โ However, these forecasts areโ subjectโ to change, particularly if inflation rises dueโ to factors like the Trump administration’s tariffs and escalating trade tensions with China.
Despite potential further cuts to the Fed’s short-term rate, a continued decline in mortgage rates isn’t guaranteed. Following a rate cut last fall, mortgage rates โคactually increased, peaking just above 7% in January of this year.
Lisa Sturtevant, chiefโ economist โat Luminous MLS,โ cautioned that โฃrates are unlikely to fall much further, advisingโค potentialโ buyers โฃagainst waiting for significantlyโฃ lower rates, as they may face higher home prices without a โcorresponding improvement in mortgage affordability.
The average 30-year mortgageโ rate has remained above 6% since September โ2022, contributing to a slump in the housingโข market. โขSales of existing U.S. โhomes fell to a nearly 30-yearโฃ low last year, and sales are currently lagging behind those of the same period in 2023.
However, the recent dip inโฃ rates has spurred someโฃ homeowners who purchasedโฃ after rates climbedโค above 6% to seek refinancing. Mortgage applications fell 1.8%โค last week, but refinance applications comprised 53.6% of the total, a slight increase from the week โprior.
Adjustable-rate mortgages are also gaining traction, โrepresenting 9.3% โof all mortgage applicationsโค last week due to their typicallyโฃ lower initial interest rates.โฃ
Forโ refinancingโ toโ become broadly โขappealing, mortgage rates would need to fall below 6%,โ as โฃapproximately 80% of U.S. homeowners with a mortgage currently have rates below that level, with 53% โholding rates below 4%. Economists generally predict the average 30-yearโข mortgage rate will โฃremain near the mid-6% range for theโ remainder of theโ year.
