Good Monday Morning!
There is more positive news for our national housing market as the Fed dropped rates last week by 0.25%. This is expected to be the first of several additional rate cuts. The average sales price of homes nationally also continued to climb. However, rising home prices can offset some of the benefits created by lower interest rates.
We’ve already seen an immediate impact from the drop in mortgage rates, and if rates fall below 6%, we may see a sharp increase in homebuyer activity in the months ahead. Here is an article from Inman News that discusses last week’s actions by the Fed.
“Homeowners rushed to refinance last week and mortgage applications from homebuyers hit their second-highest level of the year as mortgage rates descended to new 2025 lows in anticipation of several Federal Reserve rate cuts in the months ahead.
The Mortgage Bankers Association’s Weekly Applications Survey showed requests to refinance jumped 58 percent last week compared to the week before and 70 percent from a year ago.
“Indicative of the weakening job market, and in anticipation of a rate cut from the Federal Reserve, mortgage rates last week dropped to their lowest level since last October, with the 30-year fixed rate declining to 6.39 percent,” MBA Chief Economist Mike Fratantoni said in a statement. “Almost 60 percent of applications were for refinances, but there was also a pickup in purchase applications.”
At $461,300, the average mortgage refinance application was at its highest level in the 35-year history of the survey, Fratantoni said.
Requests for purchase mortgages increased for the second week in a row, by a seasonally adjusted 3 percent from the previous week and 20 percent from a year ago. The average purchase loan request was $438,100.
That brought the MBA’s seasonally adjusted purchase loan applications index to 174.0 during the week ending Sept. 12 — the second-highest reading of the year, since the index hit 180.9 during the week ending July 4.
Rates on 30-year fixed-rate mortgages tracked by Optimal Blue fell to a new 2025 low of 6.17 percent Tuesday as investors in mortgage-backed securities that fund most home loans priced in expectations for several Federal Reserve rate cuts this year.
With expectations for Fed rate cuts now priced into mortgage rates, further reductions will depend on whether central bank policymakers continue to view deterioration in the job market as a greater threat to the economy than inflation.
When the Fed cut rates by a full percentage point at the end of last year, mortgage rates moved in the opposite direction as inflation flared up again. Rates on 30-year fixed-rate mortgages hit a 2025 high of 7.05 percent on Jan. 14.
While borrowers are getting better deals on fixed-rate loans, the MBA survey shows borrowers — particularly those who are refinancing — opting for adjustable-rate mortgage (ARM) loans at the highest rate since 2008.
With ARM loan borrowers temporarily locking in rates that are about 75 basis points, or three-quarters of a percentage point lower than fixed-rate loans, ARM loan applications accounted for 12.9 percent of all loan requests last week.
Borrowers applying for conventional ARM loans were seeking loans averaging $1.13 million, while the average request for government-backed FHA and VA ARM loans was $332,500.”
Stay Healthy! Stay Safe! Remain Positive! Trust In God!
Sincerely,
Galand
galand@galandhaas.com
541.349.2620