Thirty-year fixed-rate mortgages averaged 6.5% as of September 4th, according to a Freddie Mac report. This marks a six-basis-point decrease from the previous week and the lowest level since October 2024. A separate survey by Mortgage News Daily showed a slightly lower rate of 6.49%.
The decline follows volatility in the financial markets. Concerns about a weakening labor market and subsequent bond sales led to a drop in 10-year Treasury yields. This, in turn, influenced mortgage rates, which tend to track Treasury yields. The 10-year Treasury yield reached its lowest point since May 1st.
Despite the rate decrease, buyer activity remains subdued. High home prices coupled with mortgage rates still considered relatively high are deterring many potential homebuyers. This has resulted in a slowdown in home sales.
Bob Broeksmit, CEO of the Mortgage Bankers Association, observed a slight but continued decrease in mortgage applications for the third consecutive week, despite the recent rate reduction. He indicated that the decrease wasn’t substantial enough to stimulate significant buyer activity.
Mariah O’Keefe, a Redfin real estate agent in Seattle, noted that prospective buyers are closely monitoring rates, hoping for a drop below 6%. However, she also pointed out a shift in seller behavior. Reduced demand is leading sellers to be more willing to negotiate prices or accept fairer offers.
Samir Dedhia, CEO of One Real Mortgage, viewed the rate decrease, though small, as positive movement heading into a typically slower period for the real estate market.
The affordability of homes remains a significant challenge. George Ratiu of the National Apartment Association estimated that a buyer purchasing a median-priced home of $440,000 with a 6.5% mortgage rate would face a monthly payment of approximately $2,780, including taxes and insurance. He highlighted that even for households earning $100,000 annually, this represents a substantial portion of their take-home pay, roughly 48%. This underscores the ongoing affordability issues impacting the housing market.
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