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The 30-year fixed-rate mortgage rose to average 2.90% this week from 2.87% the prior week. However, mortgage rates remain near record lows, below 3%. In the meantime, existing-home sales continued to climb in August for the third consecutive month, rising by 2.4%.
These near record-low rates significantly decreased the cost of borrowing for homebuyers. Compared to a year earlier, mortgage rates dropped more than 70 basis points. Consequently, the monthly payment for a $400,000 loan dropped by nearly $160. Moreover, the qualifying income to purchase the typical home falls more than $7,200.
Looking ahead, with these ultra-low mortgage rates, homebuying activity is expected to remain strong in the fall.