Mortgage Rates Drop to Lowest Level Since April 2023. Should You Refinance?
Mortgage rates drop to 6.34%, the lowest level they've been in over a year. Should You Refinance?
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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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
-
Is Home Insurance Tax Deductible?With home insurance rates on the rise, you might be hoping to at least claim the cost as a tax deduction. Here's what you need to know ahead of tax season.
-
The December Jobs Report Is Out. Here's What It Means for the Next Fed MeetingThe December jobs report signaled a sluggish labor market, but it's not weak enough for the Fed to cut rates later this month.
-
Trump Signals Plan to Ban Institutional Investors From Buying Single-Family HomesThe president says the move could improve housing affordability. Here’s what the data shows about investor ownership, recent buying trends and what it could mean for homebuyers.
-
Is Home Insurance Tax Deductible?
With home insurance rates on the rise, you might be hoping to at least claim the cost as a tax deduction. Here's what you need to know ahead of tax season.
-
Trump Signals Plan to Ban Institutional Investors From Buying Single-Family Homes
The president says the move could improve housing affordability. Here’s what the data shows about investor ownership, recent buying trends and what it could mean for homebuyers.
-
4 Simple Money Targets to Aim for in 2026 (And How to Hit Them), From a Financial PlannerWhile January is the perfect time to strengthen your financial well-being, you're more likely to succeed if you set realistic goals and work with a partner.
-
How to Be a Smart Insurance Shopper: The Price Might Be Right, But the Coverage Might Not BeChoosing the cheapest policy could cost you when you have a loss. You'll get the best results if you focus on the right coverage with the help of a good agent.
-
Park Pass Shock: $100 Fee Hits International Visitors to US National ParksDiscover how the new $100 fee will impact your experience visiting 11 of America's most popular parks.
-
Is Mechanical Breakdown Insurance Better Than an Extended Car Warranty?More insurers are starting to offer mechanical breakdown insurance to new car owners. What is it and should you buy it?
-
Why Your Bank Suddenly Lowered Your APY — And What to Do NextWhy banks lower APYs, options you can explore when it happens and whether more rate cuts are on the horizon.
-
We Are Retired, Mortgage-Free, With $970K in Savings. My Husband Wants to Downsize to Lower Our Costs, but I Love Our House. Help!We've paid off our mortgage, have $970K in savings and $5K each month from Social Security. Kiplinger asked wealth planners for advice.
