U.S. 30-Year Mortgage Rates Hold at 6.35% as Fed’s Interest Rate Cut Looms

U.S. Mortgage Rates Hold Steady at 6.35%

The average rate for a 30-year mortgage in the U.S. remained steady at 6.35% this week, as markets await an anticipated interest rate cut by the Federal Reserve later this month. According to Freddie Mac, this is the same rate as last week. A year ago, the average rate stood higher at 7.12%.

The last time the rate was this low prior to last week was on May 11, 2023, offering some relief to borrowers compared to the highs seen last year.

15-Year Fixed Mortgage Rates Ease Slightly

For homeowners looking to refinance, the 15-year fixed-rate mortgage dipped slightly, falling to 5.47% from 5.51% last week. Last year at this time, the rate averaged 6.52%. This minor drop may prompt more refinancing activity, but elevated rates continue to have a broader impact on the housing market.

Impact of Fed Policy and Treasury Yields

Mortgage rates are influenced by various factors, including how the bond market responds to the Federal Reserve's interest rate decisions. Changes in the 10-year Treasury yield, which many lenders use as a benchmark for pricing loans, can affect mortgage rates.

The yield, which reached 4.7% in April, has since dropped to 3.75% in anticipation of a Fed rate cut. This movement could continue to influence mortgage rates in the coming weeks.

Housing Market Slowdown Continues

Mortgage rates have hovered around 7% for much of this year after hitting a 23-year high of 7.79% in October. These elevated borrowing costs, more than double what they were just three years ago, are keeping many potential homebuyers out of the market, extending the U.S. housing market slump into its third year.

While the sales of existing homes improved slightly in July, breaking a four-month decline, new data on contract signings suggests the housing market could slow again. The National Association of Realtors’ Pending Home Sales Index fell by 5.5% in July compared to the previous month, and was down 8.5% from a year ago. This could indicate fewer completed sales in the coming months as contracts typically take one or two months to close.

The Bottom Line

As mortgage rates hold steady, many prospective homebuyers remain cautious, waiting for potential changes following the Federal Reserve’s upcoming decision on interest rates. With signs of a slowing housing market and fluctuating borrowing costs, buyers and homeowners alike may need to keep a close eye on future rate adjustments.

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