“As rates continue to drop, the number of homeowners who have the opportunity to refinance is expanding. In fact, the share of market mortgage applications that were for a refinance reached nearly 47%, the highest since October.”
The average rate on a 30-year fixed mortgage was 6.35% a year ago, while the 15-year fixed mortgage rate fell to 5.6% from last week’s 5.69%. A year earlier, the 15-year note averaged 5.47%, Freddie Mac reported.
Similarly, latest data from Redfin showed that the median mortgage payment fell to $2,616, its lowest level since the beginning of the year.
Rates have been trending lower as investors anticipate a possible Federal Reserve rate cut at the central bank’s upcoming meeting. While the Fed does not directly set mortgage rates, its policy decisions influence bond yields, particularly the 10-year Treasury, which lenders use as a benchmark for home loan pricing.
Affordability gap persists despite lower rates
Despite the rate relief, housing affordability remains a major hurdle. A recent Realtor.com report found that as of August, only 28% of homes on the market were affordable for the average US household, down from from 55.7% in 2019.