30-year mortgage rates drop to 6.47%, hitting lowest point in over a year

The mean rate on a 30-year mortgage decreased this week to its lowest point in over a year, a pleasing affordability boost for potential home buyers and homeowners wanting to refinance their home loan to a lower rate.

The rate dropped to 6.47% from 6.73% last week, mortgage buyer Freddie Mac stated on Thursday. A year ago, the rate averaged 6.96%.

This marks the second consecutive weekly decline in the mean rate. It is now at its lowest point since mid-May last year, when it was 6.39%.

Borrowing costs on 15-year fixed-rate mortgages, favored by homeowners refinancing their home loans, also decreased this week, pushing the mean rate down to 5.63% from 5.99% last week. A year ago, it averaged 6.34%, Freddie Mac reported.

“The decrease in mortgage rates does enhance potential homebuyers’ purchasing power and should start to spark their interest in making a move,” stated Sam Khater, Freddie Mac’s principal economist. “Furthermore, this decline in rates is already offering some current homeowners the chance to refinance.”

After rising to a 23-year peak of 7.79% in October, the mean rate on a 30-year mortgage has primarily hovered around 7% this year — more than double what it was just three years ago.

The elevated mortgage rates, which can increase costs for borrowers by hundreds of dollars per month, have deterred home buyers, prolonging the country’s housing decline into its third year.

Transactions of previously owned U.S. homes declined in June for the fourth consecutive month. And purchases of new single-family homes decreased last month to the slowest yearly pace since November.

Rates have primarily eased in recent weeks as indications of decreasing inflation and a cooling labor market have heightened expectations that the Federal Reserve will decrease its benchmark interest rate next month.