Home loans are getting cheaper
Mortgage rates are down to their lowest level since February 2023.
Growing certainty that the Federal Reserve will begin a substantial rate-cutting cycle later this month have helped pull mortgage rates down to their lowest level in over a year, potentially throwing a lifeline to a residential real estate market that has seen sales collapse since the Fed started raising rates to beat back inflation.
The 30-year fixed mortgage rate fell to 6.20%, according to the weekly survey numbers produced by Freddie Mac, the government-sponsored entity that buys mortgages and packages them into government-guaranteed securities.
The rate on the 30-year fixed rate mortgages is now down more than 1.5 percentage points from late October, when the Freddie Mac rate hit its recent peak of 7.79%.
With a 10% down payment, that rate drop would lower the monthly payment on a median priced house — roughly $430,000 in July — by more than $400 a month compared to when mortgage rates were at their recent high.
The drop in rates won’t solve the US real estate market’s affordability problem on its own. But it might shore up activity in a part of the economy that has been stuck in a rut.
In Q2, investment in US residential real estate shrank at a 2% annualized rate, even as the economy as a whole posted a strong 3% growth rate.
