The rate declined to 6.47% from 6.73% last week, U.S. mortgage buyer Freddie Mac said Thursday
The average rate on a 30-year mortgage dropped this week to its lowest level in more than a year, a welcome affordability boost for prospective home shoppers and homeowners looking to refinance their home loan to a lower rate.
The rate declined to 6.47% from 6.73% last week, U.S. mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.96%.
This is the second consecutive weekly decline in the average rate. It is now the lowest it has been since mid-May last year, when it was 6.39%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also declined this week, pulling the average rate down to 5.63% from 5.99% last week. A year ago, it averaged 6.34%, Freddie Mac said.
The drop in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move, said Sam Khater, Freddie Mac’s chief economist. Additionally, this decline in rates is already providing some existing homeowners the opportunity to refinance.
After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has mostly stayed near 7% this year — more than double what it was just three years ago.
The higher mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, extending the nation’s housing slump into its third year.
Sales of previously occupied U.S. homes declined in June for the fourth consecutive month. And sales of new single-family homes dropped last month to the slowest annual pace since November.
