U.S. Mortgage Rates Hit 16-Month Low

(Reuters) – The interest rate for the most popular U.S. home loan slid to its lowest in 16 months, after Federal Reserve Chair Jerome Powell signaled the central bank was ready to lower borrowing costs next month to keep the job market from weakening further.

The average contract rate on a 30-year fixed-rate mortgage fell 6 basis points in the week ended Aug. 23, to 6.44%, according to the Mortgage Bankers Association. This is the lowest rate since April 2023.

The decline in mortgage rates, by 38 basis points in four weeks, has kept refinancing applications elevated. Homeowners who bought when rates were higher are now looking to lock in lower monthly payments. Last October, the MBA 30-year average rate peaked at 7.9%.

Mortgage applications and purchase applications increased slightly by 0.5% and 1% respectively, as potential homebuyers wait for further rate drops.

Interest-rate futures indicate predictions that the Fed will cut short-term rates by a full percentage point by the end of this year.

Rising borrowing costs and the limited availability of new and existing homes have made home ownership increasingly unattainable for many. Both Democratic presidential nominee Kamala Harris and Republican rival Donald Trump have incorporated housing affordability into their strategies for the November presidential election, with promises to reduce costs for Americans in various ways.