U.S. mortgage rates drop again to lowest level since April 2023

US mortgage rates fell again last week to the lowest level since April 2023, spurring a modest pickup in applications to buy a home.

The contract rate on a 30-year fixed mortgage eased for a fourth week to 6.44%, the longest stretch of declines this year, according to Mortgage Bankers Association data released Wednesday. That provided a small boost to home-purchase applications in the week ended Aug. 23 after a sizable drop in the prior period.

Mortgage rates move in tandem with Treasury yields, which have been falling recently on expectations the Federal Reserve will start cutting interest rates in September. Minutes of the central bank’s July meeting last week indicated “several” officials saw a case for reducing rates at the time, and Chair Jerome Powell said Friday “the time has come for policy to adjust.”

A further decline in borrowing costs is seen helping provide a spark for the housing market. But the weak level of purchases indicates that affordability challenges, due in part to high home prices, are holding prospective buyers.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.