Mortgage rates have recently fallen to their lowest levels since February 2023, which is great news for those looking to buy a home. The average 30-year fixed mortgage rate is now around 6.09%, down from last week’s 6.20%, and much lower than last fall’s peak of nearly 7.8%. This drop is linked to the Federal Reserve's recent moves to cut interest rates, making borrowing a bit easier.
While home sales slowed down in August, this dip in mortgage rates could encourage more people to enter the market in the coming months. It may take a little time for buyers to fully take advantage of the lower rates, but experts expect housing demand to pick up as the year progresses.
Why are rates dropping?
Mortgage rates tend to follow the U.S. Treasury bond market. When the Fed cuts interest rates to control inflation or boost the economy, it can lead to lower Treasury yields, which in turn lowers mortgage rates. This makes buying a home more affordable for many people.
What this means for buyers
For those who have been waiting for a better time to buy, lower rates can mean smaller monthly payments and the ability to afford a more expensive home. As we head into the fall, which typically sees less competition for homes, now may be a great time to start shopping.
Though home prices are still rising, the combination of lower mortgage rates and increased housing inventory could make this a more favorable time to buy. Keep an eye on the market, and you might find that your patience pays off in the form of better deals and more housing options.
Bottom Line
The recent drop in mortgage rates, combined with easing competition, could open the door for many buyers who’ve been sitting on the sidelines. While it may take a few months for the market to fully react to these changes, now is the perfect time to start planning your home search. Stay tuned for more updates, and make sure you’re prepared to act when the time is right!
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