Housing News

Mortgage Rates Slide Down Luring More Homebuyers into the Market

Mortgage interest rates ticked back down again, luring more homebuyers back into the market.

Rates averaged 6.30% for 30-year, fixed-rate loans in the week ending Oct. 9, according to the most recent Freddie Mac data.

That was down from 6.34% last week and 6.32% a year ago.

“Over the last few weeks, mortgage rates have settled in at their lowest level in about a year,” said Freddie Mac Chief Economist Sam Khater in a statement. “There is growing evidence that homebuyers are digesting these lower rates and gradually are willing to move forward with buying a home, which is boosting purchase activity.”

The lower rates are helping to stretch the budgets of many buyers, allowing them to get more home for their money.

Homeowners are also pouncing on lower rates. Mortgage refinances were up 18% year-over-year in the week ending Oct. 3, according to the Mortgage Bankers Association. However, refinances were down 8% from the previous week.

Even small mortgage rate declines can add up to big savings.

For example, those who took out a mortgage two years ago when rates hovered around 8% might be able to save about $400 a month with rates at their current levels. (This scenario assumes homeowners put down 20% on a median-priced home of $430,000.)

Mortgage rates could fall further in anticipation of the U.S. Federal Reserve meeting at the end of the month if the Fed looks likely to continue cutting its benchmark interest rates. The Fed’s rates are separate from mortgage rates, but mortgage rates generally move in the same direction.

So, if the Fed signals more decreases are likely, mortgage rates could come down.

However, the government shutdown is affecting the data the Fed relies on to make its rate decisions. If the Fed keeps rates as is, mortgage rates could stay the same or even rise.

"This could complicate the Fed’s ability to assess incoming trends and delay clear signals on future rate moves," Realtor.com Senior Economist Anthony Smith wrote. “If the shutdown is resolved quickly and broader conditions remain stable, this fall could bring a rare combination of opportunity and breathing room for motivated home shoppers.”