Mortgage Rates Drop To 2024 Low—Small Bright Spot Amid Economy Angst
Average U.S. mortgage rates just sank to their lowest level in 15 months, according to data released Thursday, a welcome development for prospective homebuyers navigating elevated borrowing costs, though the relief may be fleeting as concerns ease about the economy and stock market.
Mortgage rates just fell to their lowest level since last May.
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Key Facts
The average 30-year fixed mortgage rate fell from 6.73% to 6.47% over the last week, federal government-backed lender Freddie Mac reported Thursday.
Hitting the lowest level since May 2023, rates declined amid broader turmoil in capital markets as last week’s unsettling jobs report escalated concerns about a recession and bets for the Federal Reserve to quickly slash the federal funds rate to combat such a slowdown.
In the release, Freddie Mac’s chief economist Sam Khater attributed the decline to the market’s “likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing.”
Still, cheaper mortgage rates help affordability, though rates remain far above where they stood between the global financial crisis and the COVID-19 pandemic’s outbreak, as rates were never above 6% from 2009 to 2021.
The relief for borrowers could be short-lived if recession fears dissipate: Recent economic data eased concerns about a slowdown, and the 10-year U.S. Treasury yield, which heavily influences mortgage rates nationally, have risen by over 30 basis points from below 3.7% on Monday to over 4%, indicating borrowing costs will likely tick up again.
Key Background
Mortgage rates are closely correlated to the Fed-determined interest rates, as mortgages typically closely follow yields for 10-year U.S. government bonds, which in turn are a reflection of the market’s expectation for the long-term federal funds rate. The Fed lifted rates from close to 0% beginning in 2022, setting rates at their current 5.25% to 5.5% range beginning last July. This caused the surge in mortgage rates as well as for loans across the board. The housing market has struggled for several years as high rates slowed buyers, and new home sales were about 40% lower in June than they were in June 2020, according to the Census Bureau. Investors expect the Fed to drastically reduce rates beginning next month, anticipating rates to come down to below 4% by next summer, according to CME Group data tracking futures contract trading.
Further Reading
Derek Saul is a New Jersey-based Senior Reporter on Forbes’ news team. He graduated in 2021 from Duke University, where he majored in
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