Mortgage rates fell to their lowest level in over a year, a positive development for the housing market.
The average rate on the 30-year fixed mortgage fell to 6.47% from 6.73% last week, Freddie Mac reported Thursday. A year ago, the average rate on a 30-year fixed mortgage was 6.96%.
Separately, the average rate on the 15-year fixed mortgage was 5.63%, down from 5.99% a week earlier. The rate on a 15-year loan was 6.34% a year ago.
“Mortgage rates fell this week … reflecting a likely overreaction to a less favorable employment report and financial market unrest for an economy that remains on solid footing,” Sam Khater, chief economist at Freddie Mac, said in a news release.
“The drop in mortgage rates increases the purchasing power of potential home buyers and should arouse their interest in moving,” the economist said.
Expectations that the Federal Reserve will cut rates in September have sent long-term Treasury yields lower, which in turn has pushed down mortgage rates.
As a result, more homeowners are seizing the opportunity to refinance their loans as interest rates fall. For example, applications to refinance a mortgage rose 16% last week compared to the previous week, the Mortgage Bankers Association reported.
