U.S. long-term mortgage rates have dropped to their lowest point in over three years, with the 30-year fixed rate now at 6.06%. This decline is boosting homebuyer purchasing power and driving a surge in both refinancing and home purchase applications, offering a glimmer of hope for a struggling housing market.
The average long-term U.S. mortgage rate has reached its lowest level in over three years, providing a much-needed boost to the housing market. The benchmark 30-year fixed-rate mortgage eased to 6.06% this week, down from 6.16% last week and significantly lower than 7.04% a year ago. Similarly, 15-year fixed-rate mortgages, popular for refinancing, fell to 5.38% from 5.46%. This reduction in borrowing costs enhances homebuyers' purchasing power, offering good news for those navigating a housing market that has been in a deep slump due to high prices and elevated rates. The easing of rates began in July, fueled by anticipation of Fed rate cuts, and was further influenced by President Trump's recent announcement that the federal government would purchase $200 billion in mortgage bonds. The lower rates have already spurred a 40% increase in mortgage refinancing applications and a 16% rise in home purchase applications last week. While home sales remained at a 30-year low last year, the median U.S. monthly housing payment has decreased, making homeownership more accessible for some. Economists anticipate further easing this year, though most forecasts suggest the 30-year mortgage rate will likely remain above 6%. However, a significant portion of current homeowners already hold fixed rates of 5% or lower, meaning rates would need to drop considerably further to entice them to refinance.
