Freddie Mac reported a drop in mortgage rates to their lowest levels since last October, according to the latest results of its Primary Mortgage Market Survey (PMMS) released on Aug. 14.
The rate for a 30-year fixed-rate mortgage was 6.58 percent, down from 6.63 percent the week before. The rate for a 15-year fixed-rate mortgage was 5.71 percent, down from 5.75 percent.
“Mortgage rates fell to their lowest level since October,” Freddie Mac Chief Economist Sam Khater said in a statement. “Purchase application activity is improving as borrowers take advantage of the decline in mortgage rates.”
The current rates are still higher than they were at the same time one year ago, when the three-year rate was 6.49 percent and the 15-year rate was 5.66 percent. However, the improvement is encouraging for the mortgage industry, which noticed an uptick in home purchase activity prior to the news of the PMMS results.
The Mortgage Bankers Association (MBA) reported a 10.9 percent increase in mortgage loan applications for the week ending Aug. 8.
“The 30-year fixed mortgage rate declined to 6.67 percent last week, which spurred the strongest week for refinance activity since April,” MBA Vice President and Deputy Chief Economist Joel Kan said in a press release. “Borrowers responded favorably, as refinance applications increased 23 percent, driven mostly by conventional and VA (Department of Veterans Affairs )applications. Refinances accounted for 46.5 percent of applications and as seen in other recent refinance bursts, the average loan size grew significantly to $366,400. Borrowers with larger loan sizes continue to be more sensitive to rate movements.”
MBA also reported that the refinance share of mortgage activity grew from 41.5 percent to 46.5 percent of total applications from the previous week. Meanwhile, the adjustable-rate mortgage (ARM) share of activity increased to 9.6 percent of total applications.
“Given the relative attractiveness of ARM rates compared to fixed rate loans, ARM applications increased 25 percent to their highest level since 2022, and the ARM share of all applications was almost 10 percent,” Kan said. “However, lower rates were not enough to entice more homebuyers back into the market, as purchase applications were only up around 1 percent over the week, although still stronger than last year’s pace.”
The share of Federal Housing Administration (FHA) loans declined slightly to 18.4 percent of total applications, compared to 18.5 percent the week prior. The share of loans provided through the VA increased to 14.2 percent from 13.3 percent the week prior and loans provided by the U.S. Department of Agriculture (USDA) remained unchanged at 0.5 percent of all loans compared to the previous week.