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Home buyers and refinancers had the opportunity to lock in the lowest mortgage rates since early February this week, averaging 6.73%. Plus, the average mortgage rate is now lower than a year ago.
The Federal Reserve also suggested this week that a possible cut to its key benchmark rate could take place this fall.
That may prompt some prospective home buyers to hold out for even lower mortgage rates. But Lisa Sturtevant, Bright MLS chief economist, says that hoping that rates to head much lower could be a miscalculation.
“The Federal Reserve will almost certainly cut rates in September—the first cut since 2020,” Sturtevant says. “However, there is no direct ‘cause-and-effect’ relationship between the Fed rate cuts and a drop in mortgage rates.” What’s more, “expectations about a September rate cut are already baked in, which is why we’re already starting to see mortgage rates start to come down.”
Still, Sturtevant does expect mortgage rates to continue to fall throughout the second half of the year and end the year at an average of about 6.4% for a 30-year fixed-rate mortgage. “Rates will continue to fall in 2025, though it is likely that they will remain above 6% through the end of next year,” she says.
Housing affordability will remain a top challenge for home buyers, who have been facing higher home prices, says Sam Khater, Freddie Mac’s chief economist. But “a recent moderation in home price growth and increases in housing inventory are a welcoming sign for potential home buyers,” he says.
Indeed, the National Association of REALTORS® recently reported that more opportunities for home buyers appear to be opening up in the market, and contract signings are already responding, rising nearly 5% in June.
Mortgage Rates This Week
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 1:
30-year fixed-rate mortgages: averaged 6.73%, dropping from last week’s 6.78% average. Last year at this time, 30-year rates averaged 6.90%.
15-year fixed-rate mortgages: averaged 5.99%, falling from last week’s 6.07% average. A year ago, 15-year rates averaged 6.25%.
