Freddie Mac Mortgage Rates—August 8th, 2024

What happened to mortgage rates this week

The Freddie Mac rate for a 30-year mortgage declined by 0.26 percentage points to 6.47% this week, the lowest level since May 2023, as 10-year Treasury yields dropped into the 3.7% – 4% range since the prior week’s survey. The strong downward trend in 10-year yields has been driven by two primary factors. First, the market has priced in rate cuts in September and December due to recent positive inflation readings. Second, July’s unexpectedly low employment reading has led some investors to believe we may already be in a recession so they have sought safety in the bond market. This move towards bonds has driven down 10-year treasuries to lows not seen since last year, and thus mortgage rates have fallen.

What it means for the housing market

How much has the drop in mortgage rates saved borrowers since they hit their peak in October 2023? Using a median listing price of $440,000, the monthly interest and principal payment would have been $2,532 back in October 2023, assuming a 20% down payment and 7.79% mortgage rate. That payment with today’s rate of 6.47% would be $2,218 – a savings of over $300 per month. 

As a result of these recent declines, mortgage rate relief is arriving quicker than many expected, and the recent downward trend is encouraging news for potential homebuyers who have been waiting until next year to participate in the market. In addition, the increase in affordable inventory may be enough to draw in some of the buyers to the market this fall, leading to an uncharacteristic bump in the market during a time that normally sees seasonal cooling. Looking ahead, we expect this year’s elevated inventory to be able to absorb an unexpected demand that may come from falling mortgage rates this fall, and as such, we don’t expect home price growth to deviate much, if at all, from a stabilized trajectory.