The average interest rate for a 30-year fixed mortgage has taken a significant dip, reaching its lowest point in two years. For the week ending September 13, the rate for this popular home loan fell by 14 basis points to 6.15%, marking the lowest rate since September 2022, according to the Mortgage Bankers Association. This drop comes on the heels of a 14-basis-point decrease the previous week.
The market is buzzing with anticipation for a potential interest rate cut by the Federal Reserve, possibly as large as 50 basis points, which could lead to even lower mortgage rates. The Federal Reserve hasn’t lowered rates in four years, so this potential shift is generating significant excitement.
“The 30-year fixed mortgage rate, at 6.15 percent, is now at its lowest since September 2022 and is more than a full percentage point lower than a year ago,” said Joel Kan, MBA’s deputy chief economist.
The declining rates have sparked a surge in refinancing activity. Refinance applications have more than doubled compared to last year’s pace, with both conventional and government loans seeing a jump in refinancing activity to their fastest pace since 2022. This has resulted in an increased share of mortgage activity dedicated to refinancing, rising to 51.2% of total applications from 46.7% the previous week.
The adjustable-rate mortgage (ARM) share of activity has also seen an increase, rising to 5.9% of total applications.
The news has also impacted mortgage lender stock prices. Rocket Companies Inc. (RKT) saw a decrease of 1.35% to $20.39, while Bank of America (BAC) dropped by 0.13% to $39.50. LendingTree, Inc. (TREE) saw a modest increase of 0.27% to $58.53. Exchange-traded funds (ETFs) holding these stocks also reflected the market movement, with the Meet Kevin Pricing Power ETF (PP) down 0.31%, the Adaptiv Select ETF (ADPV) up 0.11%, and the Davis Select Financial ETF (DFNL) up 0.22%.
With the potential for further rate decreases, the housing market is closely watching the Federal Reserve’s moves. This decline in mortgage rates could significantly impact home buying and refinancing decisions in the coming months.
