Mortgage interest rates drop to lowest level since February

Looks like homebuyers may be moving towards a much-needed reprieve.

Mortgage rates dropped to their lowest level since February, and the Federal Reserve Chair Jerome Powell is hinting at a September rate cut, Yahoo! Finance reported.

The average rate on the 30-year fixed-rate mortgage fell from 6.78 percent to 6.73 percent a week ago. A year ago, it was at 6.9 percent.

The average for the 15-year fixed rate fell from 6.07 percent to 5.99 percent a week ago. A year ago, it was 6.25 percent.

This is a promising sign given that home prices just reached another record high in May, according to S&P CoreLogic data.

Freddie Mac’s chief economist Sam Khater said in a release that the expectation of an upcoming decrease in the Fed rate and signs of cooling inflation “bode well” for the market, but noted homebuyer apprehension may not subside immediately.

Applications for a mortgage to purchase a home declined by 2 percent, according to a survey by the Mortgage Bankers Association. 

However, buyer behavior isn’t always predictable. In April, as interest rates rose to 7 percent, mortgage applications increased. And even though the Fed declined to cut rates in May, mortgage interest rates still continued to fall.

It remains to be seen how buyers will respond to the sudden drop in interest rates, especially as there is talk of another rate drop next month.

 — Christina Previte

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