Mortgage rates hit 10-month low, boosting hope for beleaguered homebuyers

Mortgage rates hit a 10-month low Thursday, bolstering hope for a turnaround in what has been a sluggish real estate market. The rate could fall further if the Federal Reserve cuts interest rates when it meets next month, as is widely expected.

The 30-year rate is 6.58%, according to mortgage buyer Freddie Mac, down from 6.63% last week, the Associated Press reported. One year ago, it was 6.49%.

The 15-year rate also fell, dipping to 5.71% from 5.75%. The rate, which is often used in home refinancing, was 5.66% at this time last year.

The news comes as the Trump administration is taking steps to help more buyers enter the market. Home sales sank to their lowest level in nearly 30 years in 2024, AP reported, and the market has been in a slump since early 2022.

While record-low interest rates sparked a home-buying boom during COVID-19, inflationary policies of the Biden administration such as the now notorious “Inflation Reduction Act” caused prices to soar at rates not seen in 40 years. Incomes did not keep pace, rapidly pricing many buyers out of the market.

This is the fourth week in a row that rates have dropped, according to AP. That and the summer buying season sparked a 10.9% increase in mortgage applications last week from the week before, the Mortgage Bankers Association reported. Nearly half of those were refinancing applications.

Many homebuyers are also opting for adjustable rate mortgages, hoping that rates will continue to drop.

The Federal Reserve Open Market Committee will meet September 16-17, announcing at the end its outlook and decision about interest rates.

A rate cut could boost the job market and economy, AP reported, although it noted it could also spur inflation. However, fears about President Donald Trump’s tariffs causing inflation have been largely unfounded, leading some to question whether an interest rate cut would do the same.

Trump and Federal Housing Finance Director William Pulte have been pressuring Federal Reserve Chairman Jerome Powell to cut rates to further boost the economy, with Pulte even calling for Powell’s resignation.

Still, the Republican administration may have a ways to go in reversing the high cost of housing that spiked under Biden. The median sales price of an existing home hit an all-time high of $435,300 in June.

Joel Berner, a senior economist at Realtor.com, said more can be done to draw-in disillusioned buyers.

“Homebuyers who have been relegated to the sidelines by high financing costs got some encouragement in the past two weeks, but it remains to be seen if it’s enough to get more of them back in the game,” Berner said.