Mortgage rates moved lower again this week, offering up more potential savings to home buyers. The 30-year fixed-rate mortgage averaged 6.08% this week, the lowest weekly average since September 2022, Freddie Mac reports.

Rates also are now considerably lower from just a year ago when they pushed above 7%. A home buyer purchasing a $400,000 home at today’s rate could lock in monthly mortgage payments that are $366 lower—or $4,392 cheaper annually—due to the drop in mortgage rates, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®.

At this week’s 6.08% rate average, with a 20% down payment, a borrower could have a monthly mortgage payment averaging $1,935 on a $400,000 home, Lautz says. With a 10% down payment, the typical payment would be $2,177.

The lower rates could motivate more home buyers to move forward on a home purchase. NAR reported Thursday that contract signings inched up 0.6% in August, largely attributed to the drop in mortgage rates that was helping to improve home affordability.

Still, prospective home buyers may not want to keep holding out for lower rates: “Mortgage rates are not likely to come down in a meaningful way,” Lautz says. “While there could be minor reductions in mortgage interest rates, those waiting for further improvements in affordability could be priced out further as home prices continue to climb.”

The median existing-home sales price in August rose to $416,700, up 3.1% from a year earlier, according to NAR’s data.

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 26:

• 30-year fixed-rate mortgages: averaged 6.08%, dropping slightly from last week’s 6.09% average. A year ago, 30-year rates averaged 7.31%.
• 15-year fixed-rate mortgages: averaged 5.16%, rising from last week’s 5.15% average. Last year at this time, 15-year rates averaged 6.72%.

Source: Mortgage Rates Fall to 2-Year Lows REALTOR® Magazine (September 27, 2024) Melissa Dittmann Tracey