Mortgage rates held steady at a 6.35% national average this week, but many prospective home buyers are sticking with a “wait-and-see” attitude before entering the market. They may be waiting for the Federal Reserve’s next meeting, when it will vote on whether to lower its benchmark interest rate.
Still, other buyers are trying to get an early start on what could be a fall rush for homes. Mortgage applications for a home purchase rose 3% in the latest week, the Mortgage Bankers Association reports. Mortgage rates are still significantly lower than they were a year ago, when they marched above 7%, however. “Some buyers are taking advantage of lower rates and more housing inventory,” says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. At this week’s average rate of 6.35%, a monthly mortgage payment on a home priced at $400,000 (assuming a 20% down payment) would be $1,991, Lautz says.
Still, mortgage applications remain 4% below what they were a year ago. Home prices have been climbing, which could be making some prospective buyers hesitant to purchase. Also, “while mortgage rates are significantly lower than in recent months, anticipation of a Fed rate cut in two weeks may have buyers reticent to jump in so they can wait for even lower rates,” Lautz says. “However, as nearly everyone has forecasted a Fed funds rate cut, it is unlikely to lower mortgage interest rates significantly.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 5:
- 30-year fixed-rate mortgages: averaged 6.35%, the same average as last week. A year ago, 30-year rates averaged 7.12%.
- 15-year fixed-rate mortgages: averaged 5.47%, falling from last week’s 5.51% average. Last year at this time, 15-year rates averaged 6.52%.
