With rates declining last week and mortgage applications for home purchases up, there's hope on the horizon for slow markets, NAR said.

CHICAGO – Mortgage rates have dropped to their lowest level since October. The 30-year fixed-rate mortgage averaged 6.58% this week, Freddie Mac’s latest index shows.

Hopeful home buyers appear to be responding to the chance to lock in lower borrowing costs: Mortgage applications for home purchases are 17% higher than the same week a year ago, the Mortgage Bankers Association reported this week.

Home buyers are taking notice of the second week for lower rates, after higher rates have been blamed for less transaction activity during the last few months.

“Buyers are in a sweet spot with more housing inventory and slightly better rates,” Jessica Lautz, deputy chief economist at the National Association of Realtors®, said last week in response to the lower rates. “Rates are still entrenched in the mid-6% range. Is the current rate low enough for homeowners to list their homes? Maybe not for all, but for some who have accumulated a tremendous amount of housing equity, they may find the move easier with larger down payments on their next purchase.”

Some prospective home buyers are eyeing potential initial savings from adjustable-rate mortgages. The average contract interest rate for 5/1 ARMs fell to 5.80% this week, MBA reports. ARMs offer fixed terms for a set period of time before resetting at market rates.

“Given the relative attractiveness of ARM rates compared to fixed rate loans, ARM applications increased 25% to their highest level since 2022, and the ARM share of all applications was almost 10 percent,” says Joel Kan, an MBA economist.

Mortgage rate averages this week

Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 14:

30-year fixed-rate mortgages: averaged 6.58%, dropping from last week’s 6.63% average. A year ago, 30-year rates averaged 6.49%.
15-year fixed-rate mortgages: averaged 5.71%, down from last week’s 5.75% average. Last year at this time, 15-year rates averaged 5.66%.
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