Hanover Advisors Inc.
08/08/2024 | News release | Distributed by Public on 08/09/2024 18:03
Mortgage Rates Plunge to Lowest Level in More Than a Year
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Mortgage Rates Plunge to Lowest Level in More Than a Year
August 8, 2024
The recent worries about the economy have had a silver lining for prospective homebuyers, as mortgage rates fall to a 15-month low.
Average rates on the popular 30-year fixed mortgage have retreated substantially this week, from 6.81% on Monday to 6.4% on Friday, according to Mortgage News Daily. That is the lowest rate since April 2023.
The drop follows a weaker-than-expected monthly jobs report last week, which raised fears of an economic slowdown and sent bond yields tumbling. Mortgage rates loosely track the yield on the 10-year U.S. Treasury.
The 30-year fixed rate reached its recent high of 7.52% in late April, hampering home sales. Prospective buyers this year have faced not only the prospect of higher rates but also higher prices and a historic lack of inventory. Supply has improved somewhat in recent months, but not enough to material slow price growth.
The difference of just 1.1% in rates is stark when it comes to affordability. In April, a buyer purchasing a $400,000 home with a 20% down payment and a 30-year fixed-rate mortgage would have been facing a monthly mortgage payment of $2,240. Today, that same buyer's payment would be about $2000. More buyers are also able to qualify for a loan at today's rates.
A sustained retreat in mortgage rates would be a welcome sign for the housing market, which has languished this year. Mortgage applications to purchase a home have been running about 15% lower than last year, according to the Mortgage Bankers Association. The drop in rates could jumpstart demand and help with inventory limitations, as more potential sellers would be willing to put their homes on the market.