US mortgage rates plunge to 7%, the largest drop in 2 years

Posted on August 14, 2024   |  

US 30-year mortgage rates saw their biggest drop in two years, hitting their lowest point since May 2023, which led to a spike in refinancing applications.

The 30-year fixed mortgage rate fell by 27 basis points to 6.55% for the week ending August 2, while the five-year adjustable rate dropped by 31 basis points to 5.91%, the lowest this year.

Refinancing applications surged nearly 16% last week, reaching a two-year high of 661.4, and mortgage applications for home purchases increased by 0.8%, the first rise in a month.

The total mortgage application index, which includes both refinancing and purchase requests, went up by 6.9% last week, reaching its highest level since early this year.

Mortgage rates are linked to US government bond yields, which fell after a weak jobs report, leading to expectations that the Federal Reserve might cut rates further.

The average 30-year mortgage rate has dropped by 0.74 percentage points from its peak of 7.29% in April, providing some relief for borrowers.

However, rising home prices continue to make it challenging for potential buyers, despite the lower mortgage rates.