US mortgage rates fell to their lowest levels since September 2022 last week, as markets anticipate a series of Federal Reserve interest-rate cuts. This drop in rates has sparked an increase in applications for home purchases and refinancing.
The contract rate on a 30-year fixed mortgage declined by 14 basis points to 6.15% for the week ending Sept 13, according to data from the Mortgage Bankers Association (MBA). This marks the seventh consecutive week of rate declines, the longest streak since 2018-2019. The 15-year mortgage rate also dropped 29 basis points to 5.42%, and adjustable-rate mortgages fell to 5.66%.
Impact on Homebuyers and Refinancing
The extended period of lower borrowing costs drove a 5.4% increase in the MBA’s home-purchase applications index, reaching a three-month high. The refinancing gauge surged more than 24%, marking the highest level since April 2022.
Lower mortgage rates are boosting homebuilder confidence and may attract more buyers and sellers into the resale market, which has been constrained by a limited number of available homes.
Market Outlook
Mortgage rates are closely tied to US government securities, with the 10-year treasury yield hovering near its lowest point since mid-2023. As the Fed is widely expected to begin cutting interest rates, possibly starting later on Wednesday, the decline in mortgage rates is likely to continue.
The MBA survey, conducted weekly since 1990, covers more than 75% of all retail residential mortgage applications in the US, drawing responses from mortgage bankers, commercial banks, and thrifts.
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