US mortgage rates fall again to lowest level since April 2023

(Bloomberg) — U.S. mortgage rates fell again last week to their lowest level since April 2023, prompting a modest increase in home-buying applications.

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The contract rate on a 30-year fixed mortgage fell for a fourth week to 6.44 percent, the longest decline this year, according to Mortgage Bankers Association data released Wednesday. This gave a small boost to home purchase applications in the week ended August 23, after a sizeable decline in the previous period.

Mortgage rates move in tandem with Treasury yields, which have recently fallen on expectations that the Federal Reserve will begin cutting interest rates in September. Minutes of the central bank’s July meeting last week indicated that “several” officials saw a case for cutting rates at the time, and Chairman Jerome Powell said on Friday that “the time has come for policy to adjust.”

A further fall in borrowing costs is believed to help create a spark for the housing market. But the weak level of purchases indicates that affordability challenges, due in part to high house prices, are holding back potential buyers.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data covers more than 75% of all US retail residential mortgage applications.

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