U.S. Mortgage Rates See Sharpest Weekly Drop in Over a Year
Falling interest rates bring hope to homebuyers and refinancers, but housing affordability challenges remain across the U.S.
Mortgage rates in the United States recorded their steepest weekly decline in more than a year, signaling a potential turning point for the sluggish housing market.
According to the Primary Mortgage Market Survey released by Freddie Mac on Thursday, the average rate on a 30-year fixed mortgage fell to 6.35%, down from 6.5% the previous week—the lowest level in 11 months.
Similarly, the average 15-year mortgage rate dropped to 5.5% from 5.6%, compared to 5.27% a year earlier, according to data reported by the World Property Program. Sam Khater, Chief Economist at Freddie Mac, noted: “Rates are moving in the right direction, and buyers are noticing.” He highlighted that mortgage purchase applications saw their strongest annual growth in more than four years.
Rising Applications and Refinancing Surge
Data from the Mortgage Bankers Association (MBA) showed a 9.2% increase in total mortgage applications last week, driven largely by a 12.2% jump in refinancing applications, which accounted for nearly half of all activity. Mortgage applications for new home purchases also rose 6.6%, hitting a two-month high.
Economic Context
The rate decline comes amid broader signs of economic slowdown, including weaker labor market data and a rising unemployment rate, now at 4.3%. These indicators have strengthened expectations that the Federal Reserve may cut benchmark interest rates at its next meeting on September 17. The central bank has kept rates unchanged since December, holding them within a 4.25%–4.5% range, while concerns remain that tariffs imposed by former President Donald Trump could fuel inflation.
Affordability Still a Challenge
Although falling mortgage rates are welcome news for homebuyers and borrowers, affordability challenges persist. Home prices remain high, and housing supply remains constrained. Experts suggest that while the drop in rates may stimulate demand, it alone will not resolve the nation’s growing housing crisis.
