Mortgage rates tumble to lowest level since October 2024

Mortgage rates fell to the lowest level since October 2024, mortgage buyer Freddie Mac said Thursday.

Freddie Mac’s latest Primary Mortgage Market Survey, released Thursday, showed the average rate on the benchmark 30-year fixed mortgage fell to 6.5% from last week’s reading of 6.56%. 

This week’s figure was the lowest since Oct. 17, 2024, when the 30-year fixed rate averaged 6.44%.

The average rate on a 30-year loan was 6.35% a year ago.

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“Mortgage rates continue to trend down, increasing optimism for new buyers and current owners alike,” said Sam Khater, Freddie Mac’s chief economist. “As rates continue to drop, the number of homeowners who have the opportunity to refinance is expanding. In fact, the share of market mortgage applications that were for a refinance reached nearly 47%, the highest since October.”

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Meanwhile, the average rate on the 15-year fixed mortgage fell to 5.6% from last week’s reading of 5.69%. One year ago, the rate on the 15-year fixed note averaged 5.47%.

The welcome news of lower rates comes as a recent report from Realtor.com found that fewer than 30% of homes on the U.S. housing market are affordable for the average household.

As of August, only 28% of homes on the market were priced within reach of the typical household, with the maximum affordable home price for a median-income household falling to $298,000. In 2019, that figure was $325,000, according to the real estate firm’s Buying Power Report. This means buying power is down by nearly $30,000 nationally since 2019, even though the median income rose by 15.7%.

Higher mortgage rates are largely to blame, according to Realtor.com Chief Economist Danielle Hale.

“Even as incomes grow, higher interest rates have eroded the real-world purchasing power of the typical American household,” Hale said, noting that “this dynamic is forcing many buyers to adjust their expectations, whether that means looking for smaller homes, moving farther out or delaying the dream of homeownership altogether.”