Mortgage rates are hovering around their lowest averages in over a year as borrowers and economists await more data about the economy, according to Freddie Mac.
The 30-year, fixed-rate mortgage, a common loan choice for homebuyers, averaged 6.35% as of Sept. 5. That’s unchanged from the previous weekly average, but it’s lower than the comparable week this time last year when it stood at 7.12%, the mortgage giant said Thursday. It’s the fifth consecutive week that rates have averaged below 6.5%.
The 15-year, fixed-rate mortgage, another common loan option for homebuyers, eased, averaging 5.47%. That’s lower than last week when it stood at 5.51%, and it’s lower than a year earlier when it was 6.52%.
Daily mortgage rates, often more volatile than the weekly averages, had also eased as of Thursday afternoon, coming in at the same rate as the weekly average. The 30-year, fixed-rate mortgage was 6.35%, according to Mortgage News Daily, while the 15-year, fixed-rate mortgage stood at 5.85%.
That means if a homebuyer took out a loan today, they would get a lower interest rate on that loan than yesterday. But, the recent changes in daily rates have been somewhat negligible for borrowers, according to Matthew Graham, a former loan originator and chief operating officer of Mortgage News Daily.
“Most borrowers would see little — if any difference between today's loans quotes and those from August 5th,” he said in a post Wednesday. “As such, today's rates basically match the lowest in well over a year.”
Anticipated changes
The downward trend in rates is part of a broader shift taking place in the national economic landscape. Most economists anticipate that later this month, the Federal Reserve will lower interest rates for the first time in more than two years. The U.S. central bank started hiking rates in 2022 to slow down the economy and ease inflation. Now, it’s expected to start bringing rates down, a move that would make it cheaper to borrow money.
This week’s averages probably stayed flat because markets are awaiting more data about the U.S. job market, according to Sam Khater, Freddie Mac’s CEO.
But while industry professionals expect that interest rate cuts from the Fed and forthcoming economic data will ease pressure in the mortgage market in the long term, they have also warned borrowers not to expect dramatic drops in mortgage rates this month.
“By the time the Fed actually cuts, most of the mortgage rate movement associated with [September’s] cut will have already happened,” Graham wrote.
That said, the outlook for the housing market is mixed, according to Khater.
“Even though rates have come down over the summer, home sales have been lackluster. On the refinance side however, homeowners who bought in recent years are taking advantage of declining mortgage rates in order to lower their monthly payments,” he said in a statement Thursday.