Mortgage rates tumble, marking largest weekly drop in a year

Mortgage rates tumbled this week, posting the largest weekly drop in the past year, mortgage buyer Freddie Mac said Thursday.

Freddie Mac’s latest Primary Mortgage Market Survey, released Thursday, showed the average rate on the benchmark 30-year fixed mortgage fell to 6.35% from last week’s reading of 6.5%. 

The average rate on a 30-year loan was 6.2% a year ago.

“Mortgage rates are headed in the right direction and homebuyers have noticed, as purchase applications reached the highest year-over-year growth rate in more than four years,” said Sam Khater, Freddie Mac’s chief economist.

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The average rate on the 15-year fixed mortgage fell to 5.5% from last week’s reading of 5.6%. One year ago, the rate on the 15-year fixed note averaged 5.27%.

Meanwhile, mortgage applications increased 9.2% last week, according to the Mortgage Bankers Association. The increase in the MBA’s index to 297.7, marked the highest in more than three years. The increase was led by a 12.2% increase in the index tracking applications to refinance a mortgage to its highest in nearly a year. Refinancing applications accounted for nearly half of all applications last week, the MBA said.

The index tracking loans for property purchases rose 6.6% to its highest in about two months.

The housing market has been in a protracted slump due to a combination of high borrowing costs, elevated property prices and limited supply of homes on the market, but recent data suggest the worst may have passed for the sector. The supply of existing homes for sale has been steadily inching higher, annual price increases have started leveling off, and interest rates now appear ready to ease further as the Fed seems ready to shift gears to cut rates as early as next week.

The central bank has left its benchmark rate steady since last December at 4.25%-to-4.50% on concern that President Donald Trump’s aggressive tariffs would fuel an upswing in inflation.

Reuters contributed to this report