U.S. 30-Year Mortgage Rates Drop on Weak Jobs Data, Fed Rate Cut Signals

The interest rate on the most popular mortgage in the U.S. fell last week to a 15-month low after the Federal Reserve signaled it would start cutting rates in September and a shift in the job market fueled speculation that the rate cuts would be more severe. The Mortgage Bankers Association said Wednesday that the average 30-year fixed-rate mortgage interest rate fell 27 basis points in the week ended Aug. 2 to 6.55%, the lowest since May 2023 and the biggest decline in two years. The drop offers potential homebuyers a reprieve from a housing market that has become increasingly difficult to buy in recent years as home prices and borrowing costs have both increased. In addition, those buying homes when interest rates are rising also have the option of refinancing and reducing their payments. The average 30-year interest rate at MBA hit a high of 7.9% in October. The MBA said Wednesday that Refinance mortgage applications surged to a two-year high, but homebuying activity rose less than 1% as a small number of homes sold pushed up prices. The Federal Reserve, which has been aggressively raising interest rates to fight inflation in 2022 and 2023, sending borrowing costs to their highest in decades, signaled last week that easing price pressures and a slowing labor market mean a rate cut could be imminent as soon as next month. The central bank has held interest rates unchanged at 5.25% to 5.50% for more than a year. Two days after the Fed’s last policy meeting, the Labor Department’s monthly jobs report showed that the U.S. unemployment rate jumped to 4.3% in July, and hiring slowed, raising concerns that a recession is either imminent or already in progress. The fears sent stocks tumbling hard, reverberating across the globe on Monday before stocks recovered slightly on Tuesday. The news also sent U.S. Treasuries surging, pushing yields, which move inversely to bond prices, downward, and sending mortgage rates, which are closely linked to them, down. That’s good news for millions of U.S. households looking for a new home, cheaper housing prices or both. Although the Fed held rates steady at its July meeting, its post-meeting policy statement showed the central bank is now as concerned with the health of the labor market as it is with reducing inflation. Mary Daly, President of the Federal Reserve Bank of San Francisco, said Monday that the change in communication has led to lower mortgage rates as investors anticipate the central bank’s next move. “You see policy that’s working, even before we cut rates,” she said. Currently, interest rate futures reflect expectations that the Fed will cut rates by a full 1 percentage point by the end of the year. Starting with a 0.5 percent cut next month, More than 4 million mortgages have interest rates of 6.5 percent or higher, according to Intercontinental Exchange’s ICE Mortgage Monitor. More than 6 out of 10 mortgages have interest rates below 4 percent, according to FreddieMac, indicating that for many homeowners, mortgage rates will have to fall much lower to justify the cost of refinancing or to entice them to buy a new home and put their current home on the market. https://github.com/bardcollege/bardcollege.github.io/issues/11 https://github.com/seanabu/seanabu.github.io/issues/6 https://github.com/HeTingwei/ReadmeLearn/issues/2 https://github.com/misterch0c/GithubLeakAlert/issues/5 https://github.com/chidiwilliams/github-stories/issues/8 https://github.com/DSCKabarak/git-intro/issues/93 https://pastelink.net/6o5dkyce https://linksome.me/fredascaxaw