Housing News

Mortgage Rates Fall to Lowest Level in Nearly a Year

One of the biggest trends in real estate over the last few months has been the fall of mortgage interest rates.

It continued over the past week, with mortgage rates falling to levels not seen in almost a year. That’s great news for homebuyers struggling with affordability as well as homeowners eager to refinance their existing loans.

Rates averaged 6.5% for 30-year, fixed-rate loans in the week ending Sept. 4, according to Freddie Mac data. That’s down from 6.56% in the previous week.

It’s also the lowest that mortgage rates have been since October 2024.

After declining on a slow, but consistent basis since May, rates have begun falling more quickly in the last few weeks on anticipation that the U.S. Federal Reserve will cut its benchmark rate this month.

The Fed’s rate and mortgage rates are separate from each other. However, when the Fed signals a rate cut is likely, mortgage rates often come down. With the market expecting a rate cut during the Fed’s September meeting, mortgage rates have been declining.

“Mortgage rates continue to trend down, increasing optimism for new buyers and current owners alike,” said Freddie Mac Chief Economist Sam Khater in a statement. “As rates continue to drop, the number of homeowners who have the opportunity to refinance is expanding.”

In fact, a recent report showed that millions of homeowners could financially benefit from a refinance if rates continue to drop.

The drop in rates is also welcome news for homebuyers who are facing higher home prices, as lower rates make buying a home more affordable.

Home price growth has slowed in recent months, which is also helping prospective homebuyers. National home prices grew by just 1.9% year-over-year in June, according to the most recent S&P Cotality Case-Shiller Indices, a home price index.

That represented the slowest pace of home price growth since the summer of 2023, Nicholas Godec, head of fixed income tradables & commodities at S&P Dow Jones Indices, said in the report.

As a result, buyers who’ve been sitting on the sidelines due to higher rates may want to jump back into the market, according to Bright MLS Chief Economist Lisa Sturtevant. The multiple listing service covers the mid-Atlantic region.

“Homebuyers in the market right now should not be trying to time rates,” Sturtevant said in a statement. “Instead, prospective buyers should take advantage of greater leverage and more [housing] inventory they have in most markets. Sellers are starting to reset expectations on pricing, and more are ready to come to the table to negotiate and to offer buyer assistance.”