Mortgage Rates Plummet, Sparking Hope for Housing Market Recovery

The average contract rate on a 30-year fixed-rate mortgage in the US dropped by a quarter percentage point to 7.61%, the lowest in about a month, marking the largest weekly drop in nearly 16 months, according to the Mortgage Bankers Association (MBA). This decline in rates was driven by the US Treasury's issuance update, the Federal Reserve's dovish tone, and data indicating a slower job market. Despite the dip in rates, prospective buyers are still waiting on the sidelines, resulting in a 20% decrease in purchase applications compared to the same time last year. Sellers, taking advantage of lower mortgage rates, are holding onto their homes, contributing to a shortage of inventory in the housing market.