Earlier this week, mortgage rates fell to their lowest level since April 2023. This drop in rates led to an increase in mortgage applications, particularly a surge in refinance applications. Refinancing your mortgage rate to be just 1% lower can significantly reduce your monthly payment, so it makes sense why many homeowners are refinancing given the substantial drop in rates.
For the week ending August 2, the 30-year fixed mortgage rate dropped to 6.55%, down from 6.82% the previous week, according to the Mortgage Bankers Association (MBA). And on August 5, rates dropped even lower — falling to an average of 6.34%, according to Redfin. Although rates have since risen to 6.47% (as of August 8) that’s still close to the lowest level they’ve been in over a year.
Falling rates are in part due to “doveish communication from the Federal Reserve and a weak jobs report, which added to increased concerns of an economy slowing more rapidly than expected,” says Joel Kan, MBA’s Vice President and Deputy Chief Economist. The U.S. Department of Labor's July jobs report shows that unemployment rose for the fourth straight month, reaching 4.3% — the highest it's been since October 2021.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You can use our tools below, in partnership with Bankrate, to compare mortgage purchase and refinance rates today.
Increase in refinance applications
The drop in rates has led to a significant increase in refinance applications, with mortgage application volume reaching its highest level since January of this year. According to the MBA, refinance applications increased 16% from the previous week and are 59% higher than the same week one year ago.
However, purchase applications only increased 1% from the week earlier and are 11% lower than the same week one year ago. Many homebuyers are holding off on entering the market given the expectation of lower rates.
The Kiplinger interest rate forecast predicts that if the Fed does not cut rates on September 18, it will do so at its policy meeting right after the November 5 election, which would “boost banks’ lending margins, and should bring some extra reduction in mortgage rates.”
Related Content
-
Three out of Four Retirees Say They’re OK Financially: Will You Be One of Them?In a snapshot survey of views on retirement in the U.S., three in four retirees say they have enough money to live comfortably. Will you be able to say the same?
-
10 Bond Investments to Consider Before the Fed Cuts RatesWhy these picks for your bond portfolio are poised to help you get the biggest return in market conditions.
-
Five December 31 Tax Deadlines for RetireesThe end of the year will be here before you know it, so it might be a good idea to start thinking soon about what you need to do for taxes before it arrives.
-
For Lawyers, the Bar Exam Is More Than Just a TestPeople who pass it within a few tries are proving they understand legal ethics and can handle pressure, advocate for consumers and communicate in writing.
-
How AI Can Guide Introverts to Success in Professional ServicesFear of rejection and awkward conversations can keep accounting and law firms from realizing significant growth. AI can help with that.
-
Why You Should Expect a Lower Social Security COLA for 2025Avoid the COLA social security dip in 2025 with a Health Savings Account
-
In Family Philanthropy, Embracing Differences Can Pay OffDifferent approaches to charitable giving among generations and individuals can actually enhance the family's giving. Here's how.
-
Apple's Launch Event 2024: Next-Generation Apple Watches and New AirPods 4Apple’s September 9th big event is sure to surprise and amaze with the new iPhone 16, along with next-generation Apple Watch models and new AirPods 4.
-
Five Things About Annuities That May Surprise YouThey're more varied, flexible and cost-effective than most people think, so don't let their complexity scare you off.
-
Why a 15-Year Mortgage Could Be the Key to a Larger Nest EggYour mortgage payments would be higher, yes, but you'd save quite a lot on interest and be mortgage-free 15 years sooner, freeing assets for other investments.
