T
he US 30-year mortgage rate has dipped to its lowest level since February 2023, reaching 6.09%. This marks a decline from last week's 6.20%, according to Freddie Mac. A year ago, rates averaged 7.19%.

    Borrowing costs on 15-year fixed-rate mortgages have also eased, falling to 5.15% from 5.27% last week. Rates for this type of mortgage were even higher a year ago at 6.54%, according to Freddie Mac.

    The recent trend in lower rates is attributed to the Federal Reserve's interest rate policy decisions and signs of waning inflation and a cooling job market. This has led to expectations of further Fed cuts, causing the yield on the 10-year Treasury to decrease.

    The latest rate cut by the Federal Reserve should lead to lower borrowing costs on mortgages over time. Freddie Mac's chief economist, Sam Khater, expects this to boost demand for refinancing and home purchase loans.

    After peaking at a 23-year high of 7.79% in October, the average mortgage rate has hovered around 7% for most of the year. Elevated rates have put off many would-be homebuyers, extending the nation's housing slump into its third year. However, as rates ease, more homeowners are applying to refinance their mortgages.

    Economists predict that mortgage rates will remain near current levels this year, with Fannie Mae projecting an average rate of 6.2% in the October-December quarter and a decline to 5.7% next year.