Mortgage rates continued to tumble last week, boosting prospective homebuyers in need of a loan.
The contract rate on a 30-year fixed mortgage fell 14 basis points for the week ending on Sept. 6, according to the Mortgage Bankers Association’s weekly survey. The dip marked the lowest rate since February 2023.
Unsurprisingly, lower rates meant more home purchase and refinancing activity. The home purchase application index kept by the MBA hit its highest point in two months, while the refinancing index reached its second-highest level since May 2022.
Along with declines among 30-year rates, the average contract rate on a 15-year mortgage dropped 27 basis points to land at 5.71 percent. Adjustable-rate mortgages also declined.
There could be more rate decreases in the future, as the Federal Reserve is now a week from its meeting, where it has signaled a possibility of cutting interest rates. Mortgage rates don’t directly correlate with interest rates, but 10-year Treasury note yields — a better barometer for mortgage rates — have been dropping in anticipation of rate cuts.
Activity in the mortgage and housing market is expected to pick up as rates decline and home prices move in a more affordable direction for buyers. Intercontinental Exchange’s Mortgage Monitor indicated in a report released last week housing affordability recently hit a six-month high.
But would-be buyers remain largely skeptical about the state of the housing market. Fannie Mae’s monthly Home Purchase Sentiment Index — which is determined by a survey — only increased marginally from July to August.
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