Housing News

Mortgage Interest Rates Ease as Mortgage Demand Picks Up

Mortgage interest rates edged lower this week as improving affordability and signs of stronger mortgage demand offered encouraging news for prospective homebuyers.

The average rate on a 30-year, fixed-rate mortgage fell to 6.67% for the week ending Aug. 13, according to Freddie Mac. That was down slightly from 6.69% a week earlier. A year ago, rates averaged 6.58%.

“Mortgage rates remained relatively stable this week at 6.67%,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “Housing affordability has improved from a year ago, and recent increases in purchase and refinance applications suggest that borrowers continue to respond to even modest changes in mortgage rates.”

A homebuyer purchasing a $400,000 home with 20% down would pay about $2,058 a month in principal and interest at this week’s average mortgage rate.

Mortgage activity picked up as borrowers responded to modest changes in borrowing costs.

Overall mortgage applications increased 3.6% in the week ending Aug. 7 compared with the previous week, according to the Mortgage Bankers Association (MBA). Applications to refinance an existing mortgage rose 5% from the previous week, while applications to purchase a home increased 3%.

Refinancing accounted for 40.7% of all mortgage applications, up from 39.9% the previous week.

“After five consecutive weeks of increases, mortgage rates declined slightly last week as oil prices dipped briefly,” said Joel Kan, MBA’s vice president and deputy chief economist, in a statement. “The reprieve in rates supported an increase in both purchase and refinance applications over the week.”

Beyond mortgage rates, other parts of the housing market have become more favorable for homebuyers.

“Listing prices continue to drop, time on market remains far slower than during the pandemic period, and price reductions have picked up pace even in the Northeast and Midwest recently,” said Realtor.com Senior Economist Joel Berner in a statement.