Homebuyers Await Fed’s Next Move as Mortgage Rates Hold Steady at 6.35%

Buyers Hold Off as Mortgage Rates Remain Steady at 6.35%

Although national mortgage rates have held steady at an average of 6.35% this week, many prospective homebuyers are adopting a cautious approach, waiting to see what the Federal Reserve will do next. The Fed's upcoming meeting, where it will decide whether to cut its benchmark interest rate, has buyers wondering if they should hold off on purchasing until potential rate drops are confirmed.

Mixed Activity in the Market

Despite some hesitation, other buyers are moving forward, trying to get ahead of what could be an active fall housing market. According to the Mortgage Bankers Association (MBA), mortgage applications for home purchases rose by 3% over the past week. While mortgage rates have stayed consistent, they are still much lower than the rates of over 7% from a year ago.

“Some buyers are taking advantage of lower rates and the increased housing inventory,” said Jessica Lautz, Deputy Chief Economist at the National Association of REALTORS®. At the current rate of 6.35%, a monthly mortgage payment for a $400,000 home (with a 20% down payment) would be approximately $1,991, Lautz adds.

Buyers Hesitant Due to Rising Prices and Rate Cut Speculation

However, overall mortgage applications are still 4% lower than they were a year ago. Rising home prices may be causing some buyers to hesitate. Additionally, the anticipation of the Federal Reserve potentially lowering interest rates in the coming weeks is keeping some on the sidelines as they wait for the possibility of even lower mortgage rates.

“While mortgage rates have dropped from recent highs, many buyers are waiting to see if a Fed rate cut will result in further declines. However, even if the Fed lowers rates, it may not drastically impact mortgage rates,” Lautz cautions.

Current Mortgage Rate Trends

Freddie Mac reports the following national averages for mortgage rates for the week ending September 5:

• 30-year fixed-rate mortgages: averaged 6.35%, unchanged from last week. A year ago, these rates were higher at 7.12%.
• 15-year fixed-rate mortgages: averaged 5.47%, down slightly from last week’s 5.51% average. A year ago, these rates stood at 6.52%.

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