Average 30-year Mortgage Rate Hovers Around Lowest Level Since May 2023: Freddie Mac

A for-sale sign displayed in front of a home in Miami, Florida, on Feb. 22, 2023. (Joe Raedle/Getty Images)

The average fixed rate on a 30-year mortgage held steady this week and remained at around its lowest level in more than a year, new Freddie Mac data confirmed.

According to the Primary Mortgage Market Survey (PMMS), the average 30-year fixed-rate mortgage was 6.49 percent for the week ending Aug. 15. It was up slightly from 6.47 percent in the previous week—the lowest level since May 2023.

“While rates increased slightly this week, they remain more than half a percent lower than the same time last year,” said Sam Khater, the chief economist at Freddie Mac, in a statement accompanying the data. “In 2023, the 30-year fixed-rate mortgage nearly hit 8 percent, slamming the brakes on the housing market. Now, the 30-year fixed-rate hovers around 6.5 percent and will likely trend down in the coming months as inflation continues to slow. Lower rates are good news for potential buyers and sellers alike.”

Since peaking at 7.79 percent in October 2023, the 30-year fixed-rate mortgage has been steadily declining, though there were some upticks along the way.

Meanwhile, the 15-year fixed-rate mortgage edged up three basis points to 5.66 percent. Despite the slight increase, the rate is down from 6.46 percent last year.

While mortgage rates remain above their pre-pandemic levels and may price first-time home buyers out of the U.S. real estate market, current homeowners have taken advantage of the decline.

The Mortgage Bankers Association (MBA) reported on Aug. 14 that refinancing applications surged 35 percent last week, registering its largest increase since May 2022. Homeowners submitted applications after the average 30- and 15-year fixed-rate mortgages eased to their lowest levels in more than a year.

Compared to the same time a year ago, refinancing demand rocketed 117 percent.

Overall, mortgage applications rose nearly 17 percent, the highest level since January 2023.

“Rates on both 30- and 15-year fixed rate mortgages decreased for the second consecutive week, and combined with the previous week’s rate moves, spurred another strong week for application activity as borrowers with higher rates took the opportunity to refinance,” Joel Kan, the vice president and deputy chief economist at MBA, said in a statement.

Mortgage Relief and the Housing Market

Market watchers expect further relief in mortgage rates. The 5- and 10-year Treasury yields have engaged in a slow march downward as bond investors have anticipated the Federal Reserve will cut interest rates from their 23-year high.

New attached homes are shown for sale in Vista, Calif., on Oct. 24, 2023. (Mike Blake/Reuters)

The futures market has penciled in the first rate reduction at the September policy meeting, with investors widely anticipating a quarter-point cut, according to the CME Group’s FedWatch Tool.

The latest developments in the mortgage market have fueled buyer interest and offered homebuyers tepid savings. Residential real estate brokerage Redfin reported that the median housing payment for home buyers tumbled to a six-month low of $2,588 during the four weeks ending Aug. 11. That’s $250 below the all-time high in April and up 1 percent year-over-year—the smallest increase in five years, Redfin reported.

However, it waits to be seen if this will stimulate demand, as National Association of Realtors (NAR) data reveal that sales activity has slumped in recent months.

In June, existing home sales plunged by 5.4 percent, the fourth consecutive month of falling transactions. New home sales slipped by 0.6 percent. Pending home sales rebounded by 4.8 percent in June, up from a 1.9 percent decline in the previous month.

Even in a climate of lower mortgage rates, home prices are still at record highs. The median existing-home sales price surged close to 6 percent in May to an all-time high of $419,300. Additionally, 89 percent of metro areas posted home price gains in the second quarter.

“The record-high home prices in most metro markets bring good and bad news,” said NAR Chief Economist Lawrence Yun in a statement. “It’s terrific news for homeowners who are moving ahead in wealth gains. However, it’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago.”

Industry experts do not believe the housing market will experience a sharp downturn because of the lack of supply and elevated demand. However, market conditions could come into better balance, says Greg McBride, the chief financial analyst at Bankrate.

“As builders bring more available homes to market and more homeowners decide to sell, supply and demand can come back into balance. It won’t happen overnight,” he said in an Aug. 11 report.

Since the second quarter of 2020, median home prices have soared 30 percent.