Mortgage rates dropped sharply this week after a weak July jobs report and steep downward revisions to prior months stoked fresh concerns about the health of the economy.
The 30-year fixed mortgage rate was 6.63% through the week ending Wednesday, a 9 basis point drop from 6.72% a week earlier. Meanwhile, the average 15-year fixed mortgage rate was 5.75%, down from 5.85% a week earlier.
“The 30-year fixed-rate mortgage dropped to its lowest level since April,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The decline in rates increases prospective homebuyers’ purchasing power.”
Read more: When will mortgage rates go down to 5%?
10-year Treasury yields, which mortgage rates closely track, plunged 16 basis points to 4.22% on Friday after new data showed the US added just 73,000 jobs in July, and a quarter million fewer jobs in May and June than previously reported. Amid fresh signs of labor market weakness, traders now see a 91% chance of the Federal Reserve cutting rates in September, according to CME FedWatch.
Mortgage rates don’t move in lockstep with benchmark interest rates, but they do move in response to expectations about future interest rate policy.
Read more: How the Federal Reserve rate decision affects mortgage rates
Mortgage activity ticked up last week in response to lower rates. Applications to purchase a home were up 2% through Friday, according to the Mortgage Bankers Association. Refinancing applications jumped by 5% and were 18% higher than this time last year.
Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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