Mortgage rates continued to decline in August, landing at an average rate of 6.50%. This represents a significant drop of 35 basis points (bps) from July’s average rate of 6.85%, according to Freddie Mac. The current rate also reflects a 57 bps decrease from a year ago when rates stood at 7.07%.
The downward trend was not limited to the 30-year fixed-rate mortgage. The 15-year fixed-rate mortgage also experienced a decrease, dropping by 45 bps from July to 5.68%. This rate is 75 bps lower than it was in August of last year. Meanwhile, the 10-year Treasury rate fell by 30 bps, moving from 4.28% in July to 3.98% in August.
Looking ahead, the National Association of Home Builders (NAHB) forecasts a gradual decline in mortgage rates over the next couple of years. By the end of 2024, the 30-year mortgage rate is expected to decrease slightly to around 6.66%, with a further decline to just under 6% anticipated by the end of 2025. The NAHB outlook also suggests that the federal funds rate could see a cut of 25 bps by December, though it’s possible that the Federal Reserve might opt to lower rates sooner, potentially during the September Federal Open Market Committee (FOMC) meeting.
The overall downward trajectory of mortgage rates offers some optimism for potential homebuyers and the broader housing market as 2024 approaches, with the hope of greater affordability on the horizon.
