Mortgage Rates Plunge to Lowest Level in More Than a Year

Mortgage Rates Plunge to Lowest Level in More Than a Year

Mortgage rates fell to 6.34% on Monday, the lowest since May 2023. Today, they’re at 6.54%, still showing a notable shift from last year’s peak of 8% in October and November, which significantly affected the housing market last year. The Mortgage Bankers Association’s (MBA) Weekly Applications Survey reports that mortgage application volume has now reached its highest level since January 2024. The Market Composite Index, reflecting mortgage loan application volume, increased by 6.9% on a seasonally adjusted basis from the previous week.

• The 10-year Treasury yield dipped to 3.76%, the lowest since June 2023.

• The 2-year Treasury yield slid to 3.88%, raising concerns about a recession.

• Analysts are predicting that the 30-year Freddie Mac fixed-rate mortgage could drop from 6.73% to around 6.3% next week.

• The market is pricing in about 4.6 cuts of 25 basis points each by year-end, and a 50 basis point cut in September is looking highly likely.

Ralph’s Take

Falling interest rates generally lead to lower mortgage rates, boosting buyers' purchasing power and potentially increasing market activity. The rise in mortgage applications reflects this trend. Historically, housing inventory tends to plateau in August and decline into the fall, but if mortgage rates continue to trend downward, this pattern could shift, extending a favorable selling window.