This is the lowest 30-year mortgage rate since October 2024.
As economic statistics showed weakness in the U.S. labor market, mortgage rates dropped, and homebuyers and homeowners hurried to take advantage of the situation, increasing demand for mortgages and refinances.
As of September 5, the 30-year fixed-rate mortgage fell 15 basis points to an average contract rate of 6.49%. Both homebuyers who had been waiting on the sidelines to take action and homeowners wishing to refinance were encouraged by the significant decline. The information was taken from a weekly report published by the industry association, the Mortgage Bankers Association.
Since October 2024, the 30-year mortgage rate has not been lower.
The week ending September 5 saw a 9.2% increase in the demand for mortgages overall. According to the data, purchase activity increased 6.6% and refinance activity increased 12.2% over the previous week, demonstrating robust demand from both groups. Homebuyers who apply for mortgages in order to buy a home are considered to be engaging in purchasing activity.
An adjustment for the Labor Day holiday is included in the data.
Joel Kan, the MBA’s deputy chief economist, said in a statement that the downward rate adjustment “sparked the strongest week of borrower demand since 2022, with both purchase and refinance applications moving higher.”
He said homeowners with high loan balances are particularly vulnerable to significant changes in interest rates. Almost half of all applications within the past week were for refinances.
Among the homeowners who took advantage of the reduced rates throughout the last week was Andy Crutchfield. After paying $274,000 for his Georgia home in July 2024, the 62-year-old retired military man wanted to refinance due to his high interest rate. He made the decision to pull the trigger when rates dropped. He was able to save roughly $250 a month by refinancing his 30-year mortgage from 6.5% to 6%.
“We’re also going to keep an eye on it to see if it drops again,” Crutchfield, who made use of Rocket Mortgage, told MarketWatch.
The rate on 3.3 million 30-year mortgages that have been originated since 2022 is more than 6.5%, according to Selma Hepp, chief economist at real estate data firm Cotality, who spoke to MarketWatch. If interest rates drop sufficiently, those homeowners may be eligible for a refinance.
All mortgage rates are declining.
All loan types saw a decline in mortgage rates.
For the week ending September 5, the average 30-year mortgage contract rate for homes sold for $806,500 or less was 6.49%. That represented a 15 basis point decrease from the week before.
Jumbo loans, or 30-year mortgages for homes sold for more than $806,500, had a rate of 6.44%, which was 14 basis points lower than the previous week.
A 30-year mortgage backed by the Federal Housing Administration had an average rate of 6.27%, which was 4 basis points lower. First-time homebuyers frequently use those loans.
At 5.7%, the average 15-year mortgage rate dropped 14 basis points.
Five-year adjustable-rate mortgage rates decreased 13 basis points to 5.77% on average.
