Mortgage Rates Drop to Lowest Levels

The latest data from Freddie Mac indicates a decline in the 15-year fixed-rate mortgage, while the average 30-year fixed-rate mortgage remains stable at approximately 6.49 percent for the week ending August 15. This figure represents a slight increase from the previous week but is still over half a percent lower than the same period last year. Sam Khater, Freddie Mac's chief economist, noted that while rates are still above pre-pandemic levels, the current lower rates are beneficial for both potential buyers and sellers in the housing market. Despite the positive news for some, first-time home buyers may still find themselves priced out of the market due to elevated mortgage rates. However, existing homeowners are capitalizing on the recent decline, as evidenced by a significant 35 percent surge in refinancing applications reported by the Mortgage Bankers Association (MBA) on August 14. This marks the largest increase since May 2022, as homeowners seek to take advantage of the lower average rates on 30- and 15-year fixed mortgages. The downward trend in mortgage rates coincides with a decrease in 5- and 10-year Treasury yields, as investors anticipate potential interest rate cuts from the Federal Reserve. Meanwhile, the housing market continues to experience upward pressure, with the median existing-home sales price reaching an all-time high of $419,300 in May, reflecting a nearly 6 percent increase. As more builders enter the market and homeowners opt to sell, the balance of supply and demand may stabilize, following a dramatic 30 percent rise in median home prices since the second quarter of 2020.