M
ortgage rates have hit their lowest point since October, with the 30-year fixed-rate mortgage averaging 6.58% this week, according to Freddie Mac's latest index. This decline has sparked a surge in hopeful home buyers looking to lock in lower borrowing costs: Mortgage applications for home purchases are up 17% from the same time last year, the Mortgage Bankers Association reported.

    Home buyers are taking advantage of the second consecutive week of lower rates, which have been blamed for reduced transaction activity over the past few months. "Buyers are in a sweet spot with more housing inventory and slightly better rates," said Jessica Lautz, deputy chief economist at the National Association of REALTORS. Some prospective home buyers are also eyeing potential savings from adjustable-rate mortgages, with the average contract interest rate for 5/1 ARMs falling to 5.80% this week.

    ARM applications have increased by 25% to their highest level since 2022, and now account for almost 10% of all applications, according to Joel Kan, an MBA economist. Mortgage rates remain relatively high, but the recent decline has brought them closer to pre-pandemic levels. This week's national averages from Freddie Mac include:

    * 30-year fixed-rate mortgages: averaged 6.58%, down from last week's average of 6.63% and a year ago's average of 6.49%.

    * 15-year fixed-rate mortgages: averaged 5.71%, down from last week's average of 5.75% and last year's average of 5.66%.