The average rate on a 30-year fixed-rate mortgage reached its lowest level in two years, with rates averaging 6.08% as of Thursday according to Freddie Mac data.
Despite a minimal change from the previous week (6.09%), the current rate encourages both potential buyers cautiously returning to the market and existing homeowners considering refinancing, particularly those who purchased homes when rates were over 7%.
The big picture: Mortgage applications surged to the highest level in over two years, primarily driven by increased refinancing activity in response to the declining mortgage rates.
- Freddie Mac’s chief economist, Sam Khater, noted in a statement that the downward trend in rates is leading to heightened refinance activity, offering many homeowners the opportunity to lower their monthly mortgage payments.
- Some prospective homebuyers are adopting a wait-and-see approach, anticipating further rate decreases as more economic data is released in the upcoming weeks.
Go deeper: Thirty-year mortgage rates have dropped more than a percentage point since May, contributing to increased interest from buyers more comfortable with the current rates.
- The Pending Home Sales Index, measuring housing contract activity, saw a slight improvement in August, with a 0.6% increase to 70.6 from July’s record-low reading, according to the National Association of Realtors.
