Long-Term Rates Hold Ahead of Expected Cut

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Thirty-year mortgage rates remained at 6.35%, while 15-year rates fell slightly to 5.47%. A Fed interest rate cut later this month likely will reduce mortgage rates.

WASHINGTON – The average rate on a 30-year mortgage in the U.S. was flat this week ahead of an expected interest rate cut from the Federal Reserve later this month.

The rate remained at 6.35% from last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.12%.

Before last week, the last time the average rate was this low was May 11, 2023.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, eased a little this week. The average rate fell to 5.47% from 5.51% last week. A year ago, it averaged 6.52%, Freddie Mac said.

Signs of waning inflation and a cooling job market have raised expectations the Federal Reserve will cut its benchmark interest rate next month for the first time in four years.

Mortgage rates are influenced by several factors, including how the bond market reacts to the central bank’s interest rate policy decisions. That can move the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

The yield, which topped 4.7% in late April, has pulled back sharply since then on expectations the Fed was poised to lower its main interest rate. It was at 3.75% in midday trading in the bond market Thursday.

Average rate on a 30-year mortgage ticks up to 6.49%, near its lowest level in more than a year

After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has hovered around 7% for most of this year. That’s more than double what it was just three years ago.

Elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have kept many would-be homebuyers on the sidelines, extending the nation’s housing slump into its third year.

Sales of previously occupied U.S. homes are running below last year’s pace, though they ended a four-month slide in July as homebuyers seized on more attractive mortgage rates.

Still, new data on contract signings for U.S. homes, a bellwether for future home sales, point to potentially further slowing of home sales.

The National Association of Realtors®’ pending home sales index fell 5.5% in July from the previous month, the trade group said last week. Pending transactions were down 8.5% from the same month last year.

A lag of a month or two usually exists between when a contract is signed and when the home sale is finalized. That suggests a possible pullback in sales of previously occupied U.S. homes for August or September.

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