US mortgage rates fall for second week, easing strain on buyers
MORTGAGE rates in the United States dropped for a second straight week.
The average for a 30-year, fixed loan was 6.77 per cent, the lowest since mid-March and down from 6.89 per cent last week, Freddie Mac said on Thursday (Jul 18).
Borrowing costs have been easing off highs, helping to lower the typical monthly housing payment from record levels, according to Redfin.
Buyers are also benefiting from an increase in supply, with total listings near the highest level in almost four years, Redfin said.
“We expect the rising inventory to gradually exert downward pressure on price growth, and falling mortgage rates to help lower borrowing costs, providing more relief to potential homebuyers,” Realtor.com economist Jiayi Xu said.
Slowing inflation has bolstered the outlook that the Federal Reserve may cut its benchmark rate as soon as September.
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Fed chair Jerome Powell said earlier this week that recent data is giving policymakers more confidence that inflation is headed towards the central bank’s target.
Rate cuts by the Fed could help to further reduce mortgage rates and ease a stalemate that’s gripped the market in recent years.
Buyers have been hesitant to take on high borrowing costs, while would-be sellers have shied away from parting with their pandemic-era cheap loans.
While borrowing costs are headed in the right direction and the economy remains resilient, “homebuyers have yet to respond to lower rates”, Sam Khater, Freddie Mac’s chief economist, said.
He cited applications for home-purchase loans that are roughly 5 per cent below where they were in the spring, when mortgage rates were about the same.
“This is not uncommon,” he said. “Sometimes as rates decline, demand weakens, and the apparent paradox is driven by buyers making sure rates don’t decline further before they decide to purchase.” BLOOMBERG
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