WASHINGTON — Mortgage rates fell for the fourth straight week, dropping to their lowest level in 14 months and offering a modest break to home shoppers who have struggled with high borrowing costs and elevated prices.
The average rate on a 30-year fixed mortgage slipped to 6.12 percent from 6.25 percent last week, according to a weekly survey of lenders by the Home Finance Data Institute. A year ago, the average was 6.89 percent. The average rate on a 15-year fixed loan fell to 5.41 percent.
What it means for monthly payments
The decline is small in percentage terms but adds up over the life of a loan. On a $350,000 mortgage, a buyer locking in at 6.12 percent today would pay about $2,125 a month in principal and interest, roughly $175 less than at last year’s rate.
- 6.12 percent: average 30-year fixed rate, down from 6.25 percent
- 5.41 percent: average 15-year fixed rate
- $175: approximate monthly savings on a $350,000 loan versus a year ago
- 22 percent: weekly jump in refinance applications
Mortgage rates tend to follow the yield on the 10-year Treasury note, which has eased in recent weeks as inflation reports came in softer and investors grew more confident that the Federal Reserve will lower short-term rates next year.
We are not back to the days of 3 percent mortgages, and we probably won’t be anytime soon. But every quarter point matters to a first-time buyer trying to make the numbers work.
Gloria Benton, chief economist, Home Finance Data Institute
Refinancing ticks up, buyers return slowly
Lower rates triggered a quick jump in refinancing. Applications to refinance rose 22 percent from the prior week, according to a separate industry survey, as homeowners who bought when rates were near 7 percent or higher looked for savings.
Purchase applications rose more modestly, up about 5 percent. Real estate agents say many buyers remain cautious because home prices are still near record highs in much of the country, and the number of homes for sale, while improving, remains below historical norms.
“We are seeing more showings and a few more offers, but nobody is rushing,” said Tyler Brooks, an agent in Raleigh, N.C. “Buyers are doing the math more carefully than they used to. They want to know they can afford the house even if taxes and insurance go up.”
Sellers may also start to return. Economists say many homeowners have been reluctant to list because they locked in very low rates years ago and do not want to give them up. As rates fall, more of those owners may decide the time is right to move, which could add to the supply of homes.
Some analysts cautioned against expecting rates to keep falling in a straight line. Bond markets can move quickly in response to economic data, and a stronger-than-expected inflation report could push rates back up. “Rates can bounce around a quarter point in a few weeks,” Benton said.
Housing counselors encourage buyers to compare offers from several lenders, since quoted rates and fees can vary widely. A difference of even a few tenths of a percentage point can mean thousands of dollars over the life of a loan. The survey’s averages assume a borrower with strong credit and a 20 percent down payment. Rates for borrowers with lower credit scores or smaller down payments are typically higher.
