Housing News

Mortgage Rates Continue to Decline, Driving More Homeowners to Refinance

The recent decline in mortgage interest rates continued, providing both homebuyers and homeowners with an opportunity to save money.

Rates averaged 6.27% for 30-year, fixed-rate loans in the week ending Oct. 16, according to the most recent data from Freddie Mac.

That’s down from last week’s average of 6.30%. And it was a decrease from last year at this time, when rates averaged 6.44%.

These lower rates are catching the eye of prospective homebuyers and homeowners alike, according to Sam Khater, chief economist at Freddie Mac.

“Mortgage rates inched down this week and have held relatively steady over the past several weeks,” said Khater in a statement.

“Importantly, homeowners have noticed these consistently lower rates, driving an uptick in refinance activity,” Khater added. “Combined with increased housing inventory and slower house price growth, these rates also are creating a more favorable environment for those looking to buy a home.”

As Khater noted, nationwide home prices have dipped for three straight months, according to Realtor.com. The national median listing price fell by more than $15,000 from June to September.

Lower home prices combined with the decline in interest rates is helping homebuyers get more for their money.

While overall mortgage applications were down slightly in the week ending Oct. 10, applications are still running well above where they were last year at this time, according to the Mortgage Bankers Association.

Refinance applications were up 59% over last year, while purchase applications rose 20%. Applications for refinances also made up more than half, 53.6%, of all applications.

That means that homeowners are recognizing that these decreases in rates can help them save money.

It’s also important to know that even though rates have fallen lately, it’s unknown which direction they will move next.

“Looking ahead to the rest of the year, it is difficult to forecast where rates will go, but the likely bet is that they are not going to fall much further,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. The multiple listing service covers the mid-Atlantic region. “Buyers who think they want to wait for lower rates could find themselves facing higher prices, but without an improvement in mortgage rates.”