Borrowing costs for the most popular mortgage type are holding steady, though a run of recent declines is over.
As of Thursday, the 30-year, fixed-rate mortgage averaged 6.58%, unchanged from last week, according to mortgage giant Freddie Mac. The rate for a 30-year home loan, used by the vast majority of buyers, had fallen for four consecutive weeks. It's now at the lowest average of the year.
The 15-year, fixed-rate mortgage averaged 5.69%, down from 5.71% last week, Freddie Mac said.
“Over the summer, rates have come down and purchase applications are outpacing 2024, though a number of homebuyers continue waiting on the sideline for rates to further decrease," said Sam Khater, Freddie Mac’s chief economist, in a statement.
Daily rates, typically more volatile than weekly measures, inched higher as of late Wednesday. The 30-year, fixed-rate mortgage was at 6.61%, while the 15-year, fixed-rate mortgage hit 5.97%.
Many market observers expect the Federal Reserve to cut interest rates next month, particularly after two members diverged from the consensus decision to keep rates unchanged in July.
Though the central bank doesn’t control the mortgage market, the rates it does set signal what banks charge to borrow from one another overnight, and lenders tend to follow suit.
While there could be a notable drop in rates in the next couple of years, the short-term outlook likely will be more uneven, with weekly declines followed by occasional increases, according to Melissa Cohn, regional vice president of William Raveis Mortgage.
The most telling sign of what the Fed might decide is contained in the latest economic reports related to jobs and consumer prices, she noted.
"Rates don’t fall in a straight line,” Cohn said in a statement.
Consumers should expect little movement on rates in the near term, according to Michael Becker, branch manager at Sierra Pacific Mortgage in Maryland.
"With a lack of market-moving economic data over the coming week, I expect the sideways drift of mortgage rates to continue," he said in a Bankrate.com survey.
Meanwhile, mortgage applications decreased 1.4 percent from one week earlier, according to the Mortgage Bankers Association, or MBA. Refinancings fell 3% from the previous week and were 23% higher than the same week one year ago.
Activity remains relatively stable, even with economic uncertainty and affordability concerns, noted Joel Kan, MBA's deputy chief economist.
