US mortgage rates drop to lowest level in more than a year

[BOSTON] Mortgage rates fell to the lowest level in more than a year, easing affordability concerns for homebuyers.

The average for 30-year, fixed loans was 6.19 per cent, down from 6.27 per cent last week and the lowest since early October 2024, data from Freddie Mac show.

Falling rates have given house hunters more buying power, but demand has been constrained by affordability challenges. Plus, there’s anxiety over the economic outlook due to the ongoing government shutdown and US President Donald Trump’s tariff negotiations.

Nearly 15 per cent of purchase agreements in September were cancelled, up from 13.6 per cent a year earlier, according to a report from Redfin. Deals are collapsing most often in Sun Belt markets such as Tampa, Florida, and San Antonio as buyers back out, often during the inspection period.

Homebuilders have been aggressively using mortgage rate buydowns and other incentives to lure buyers. In September, new home sales rose 3.1 per cent from the previous month to 716,416 on a seasonally adjusted annualised basis, but remained flat from a year earlier, according to data from Zonda, which tracks new home production.

Ali Wolf, chief economist for Zonda, said that the firm surveyed builders about the impact of interest rates moving lower and that “most reported that they had not noticed much of a difference, describing the market as slow and noting that consumers still seem spooked by broader macro conditions”. BLOOMBERG