The U.S. Federal Reserve (Fed) has cut interest rates for the first time since the pandemic, causing mortgage rates to fall to their lowest level in 1 year and 7 months.
According to Freddie Mac, a U.S. government-sponsored mortgage company, the average rate for a 30-year fixed-rate mortgage in the U.S. was 6.09% as of the 19th (local time), down 0.11 percentage points from a week earlier. This is the lowest level in 1 year and 7 months since February last year (6.09%).
This follows the Fed’s “big cut” of 0.50 percentage points at the September Federal Open Market Committee (FOMC) meeting held until the day before, lowering the benchmark interest rate from 5.25?5.50% to 4.75?5.50%, marking the start of a full-scale monetary easing cycle. The Fed has also indicated the possibility of an additional 0.5 percentage point cut within the year through its dot plot.
As mortgage rates fall, expectations are growing that the U.S. housing market, which had been frozen due to high interest rates, will gradually regain momentum.
Earlier, the National Association of Realtors (NAR) announced that existing home sales in the U.S. for August decreased by 2.5% from the previous month to 3.86 million units (seasonally adjusted annual rate). This is the lowest figure in 10 months since October last year. The mortgage rates reflected in the August statistics for June and July were around 7%.
Lawrence Yun, an economist at NAR, said, “The housing transaction volume in August was disappointing,” but added, “The decline in mortgage rates, combined with an increase in inventory, will create an environment where transaction volume could increase in the coming months.”
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