The average rate on the 30-year fixed mortgage dropped 16 basis points to 6.29% Friday, according to Mortgage News Daily, following the release of a weaker-than-expected August employment report.<\/p>\n
It’s the lowest rate since Oct. 3 and the biggest one-day drop since August 2024. Rates are finally breaking out of the high 6% range, where they\u2019ve been stuck for months.<\/p>\n
\u201cThis was a pretty straightforward reaction to a hotly anticipated jobs report,\u201d said Mortgage News Daily Chief Operating Officer Matt Graham. \u201cIt\u2019s a good reminder that the market gets to decide what matters in terms of economic data, and the bond market has a clear voting record that suggests the jobs report is always the biggest potential source of volatility for rates.\u201d<\/p>\n
Graham said in a post on X that many lenders are \u201cpriced better\u201d than Oct. 3 and would be quoting in the high 5% range.<\/p>\n
The drop is a major change from May, when the rate on the 30-year fixed peaked at 7.08%. It\u2019s big for buyers out shopping for a home today, especially given high home prices.<\/p>\n
Take, for example, someone purchasing a $450,000 home, which is just above August\u2019s national median price, using a 30-year fixed mortgage with a 20% down payment. Not including taxes or insurance, the monthly payment at 7% would be $2,395. At 6.29%, that payment would be $2,226, a difference of $169 per month.<\/p>\n
That might not sound like a lot to some, but it can mean the difference in not just affording a home, but qualifying for a mortgage.<\/p>\n
Homebuilder stocks reacted favorably Friday, with names like Lennar, DR Horton and Pulte all up roughly 3% midday. Homebuilding ETF ITB has been running hot for the last month as rates slowly moved lower. It\u2019s up close to 13% in the past month.<\/p>\n
The big question is whether the drop in rates will be enough to get homebuyers back in the market.<\/p>\n
Mortgage demand from homebuyers, an early indicator, have yet to respond to gradually improving rates. Applications for a mortgage to purchase a home last week were 6.6% lower from four weeks before, according to the Mortgage Bankers Association.<\/p>\n
\u201cHomebuyers grapple with a lack of affordability, sellers contend with more competition, and builders deal with lower buyer demand,\u201d Danielle Hale, chief economist at Realtor.com, said Friday in a statement after the release of the August employment report. \u201cThese conditions haven\u2019t spelled catastrophe, but have created a cruel summer for the housing market.\u201d<\/p>\n
Some analysts have argued that buyers need to see mortgage rates in the 5% range before it really makes a difference. Home prices remain stubbornly high, and while the gains have definitely cooled, they are not yet coming down on a national level. In addition, uncertainty about the state of the economy and the job market has left many would-be buyers on the sidelines.<\/p>\n<\/p>\n
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