Mortgage Rates Decline Amid Economic Uncertainty

Mortgage rates have declined for the second consecutive week, according to Freddie Mac's latest Primary Mortgage Market Survey. The average rate for a 30-year fixed mortgage fell to 6.27% from 6.3% the previous week. A year ago, the rate stood at 6.44%.

"Importantly, homeowners have noticed these consistently lower rates, driving an uptick in refinance activity," said Sam Khater, Freddie Mac's chief economist. "Combined with increased housing inventory and slower house price growth, these rates also are creating a more favorable environment for those looking to buy a home."

The 15-year fixed mortgage rate also saw a slight decrease, averaging 5.52%, down from 5.53% the prior week. One year ago, this rate was 5.63%.

Economic factors, including concerns over the labor market and the ongoing federal government shutdown, continue to impact prospective homebuyers. Jiayi Xu, senior economist at Realtor.com, noted that buying power has declined sharply as home prices and mortgage rates outpace income growth. She emphasized that substantial wage gains and improved financial stability are essential to boost purchase sentiment. Xu also highlighted that the government shutdown may further weigh on sentiment, especially in markets with a higher share of federal workers and contractors facing financial strain and concerns over potential layoffs.

While the decrease in mortgage rates has encouraged some homebuyers to re-enter the market, many remain hesitant due to economic uncertainty and affordability challenges in the U.S. housing market.