Rates on new 30-year mortgages are experiencing a slow decline, with Wednesday's average marking a decrease on two consecutive days and landing at 6.90%. While rates fluctuate among different lenders, the current decline is a welcome reprieve for potential homeowners, given that three weeks prior the 30-year average had spiked to a one-year high of 7.15%.
Apart from the 30-year mortgages, several other mortgage types have also marked a decrease in their rates. Notably, 15-year mortgages saw a two basis point drop on Wednesday, bringing down their average to 5.93%, a striking deduction from the mid-April average of 6.31%. Jumbo 30-year mortgage rates also experienced a fall of 4 basis points on Wednesday, leading to a two-day drop of 10 points, making the new average 6.85%.
Data from Freddie Mac, a government-supported mortgage loan buyer, shows a three basis point decrease in the weekly average of 30-year mortgage rates, bringing it down to 6.81%. The Investopedia daily reading of 30-year rates, however, indicates a more immediate insight into the current direction of rates but does not directly correlate with rates advertised online as those can vary based on various factors including credit score, income, and others.
Moreover, the average mortgage rates are influenced by many macroeconomic and industry factors, with one of the major ones being the Federal Reserve's bond-buying policy in response to economic pressures resulting from the pandemic. However, the Federal Reserve started reducing its bond purchases in November 2021, affecting the mortgage market significantly. The federal funds rate also contributed to fluctuations in mortgage rates due to aggressive changes between 2022 and 2023.
Looking ahead, the mortgage market's future largely depends on the Federal Reserve's approach to adjusting rates in 2025. After a 0.50 point rate cut in September, the Federal Reserve decided to hold rates steady during its third meeting of the year, possibly indicating a halt on rate cuts for a few months.