Mortgage Rates Drop to Lowest Level in over a Year and a Half

MORTGAGE NEWS | THIS WEEK'S UPDATES FROM PROSPERITY HOME MORTGAGE

30-Year Conforming — 6.42%
15-Year Conforming — 6.00%
30-Year Jumbo — 6.48%
30-Year FHA — 6.17%

FOR THE WEEK OF September 6 – September 12, interest rates decreased. "Mortgage rates have fallen more than half a percent over the last six weeks and are at their lowest level since February 2023," said Sam Khater, Freddie Mac's Chief Economist.

The Fed's policymakers have signaled that they're increasingly confident that inflation is falling back to their 2% target and are now shifting their focus to supporting the job market, which is steadily cooling. As a result, they are poised to begin cutting their benchmark interest rate next week from its 23-year high in hopes of bolstering growth and hiring. A modest quarter-point cut is widely expected.

The pickup in core inflation makes it unlikely that the Fed would consider cutting its key rate by a larger-than-usual half-point next week, as some Wall Street traders had hoped. Still, over time, a series of Fed rate cuts should reduce the cost of borrowing across the economy, including for mortgages, auto loans and credit cards.

Mortgage rates have hit their lowest point in over a year and a half. And that’s big news if you’ve been sitting on the homebuying sidelines waiting for this moment.

Even a small decline in rates could help you get a better monthly payment than you would expect on your next home. And the drop that’s happened recently isn’t small. As Sam Khater, Chief Economist at Freddie Mac, says:

“Mortgage rates have fallen more than half a percent . . . and are at their lowest level since February 2023.”

But if you want to see it to really believe it, here’s how the math shakes out. Take a closer look at the impact on your monthly payment.

The chart below shows what a monthly payment (principal and interest) would look like on a $400K home loan if you purchased a house back in April (this year’s mortgage rate high), versus what it could look like if you buy a home now (see below):

Going from 7.5% just a few months ago to the low 6s has a big impact on your bottom line. In just a few months’ time, the anticipated monthly payment on a $400K loan has come down by over $370. That’s hundreds of dollars less per month.

Bottom Line

With the recent drop in mortgage rates, the purchasing power you have right now is better than it’s been in almost two years. Let’s talk about your options and how you can make the most of this moment you’ve been waiting for.