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
-
Baby Boomers vs Gen X: Who Spends More?Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
Retire in Finland and Live the Nordic DreamHere's how to retire in Finland as a US retiree. It's ideal for those who value natural beauty, low crime and good healthcare.
-
Baby Boomers vs Gen X: Who Spends More?
Baby Boomers and Gen X are guilty of spending a lot of money. Here's a look at where their money goes.
-
After the Disaster: An Expert's Guide to Deciding Whether to Rebuild or RelocateHomeowners hit by disaster must weigh the emotional desire to rebuild against the financial realities of insurance coverage, unexpected costs and future risk.
-
A Financial Expert's Tips for Lending Money to Family and FriendsWhat starts as a lifeline can turn into a minefield if the borrower ghosts the lender. Following these three steps can help you avoid family feuds over funds.
-
The 401(k) Mistake That Could Cost You Millions in Retirement SavingsThinking about reducing your 401(K) contributions in the current market? Here are six reasons why you may want to reconsider.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
721 UPREIT DSTs: Real Estate Investing Expert Explores the Hidden RisksPotential investors need to understand the crucial distinction between a REIT's option to buy a Delaware statutory trust's property and its obligation.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid OffLife insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.
-
7 Rules Frequent Flyers Swear ByFrom dodging long lines to avoiding bad coffee, these clever travel rules can help you save time, stay healthy and reduce stress every time you fly.
