Mortgage Rates Tumble to Early April Levels. Thank the Softer Jobs Report.

Mortgage rates dipped for the third-straight week amid signs of a weakening economy. (Joe Raedle/Getty Images))

Mortgage rates slipped for the third-straight week after last Friday’s softer-than-expected report shook up the market.

The average rate for a 30-year fixed mortgage fell to 6.63%, its lowest level since April, according to Freddie Mac data published Thursday. Last week, rates averaged 6.72%. The levels still remain higher than they were a year ago.

Weaker workforce participation startled the market last week, triggering a drop in mortgage rates. Rates move in parallel with the 10-year Treasury yield, which fell after the report’s release.

“The decline in rates increases prospective home buyers’ purchasing power and our research shows that buyers can save thousands by getting quotes from a few different lenders,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

Borrowers jumped on this bandwagon: applications for home purchase loans climbed a seasonally adjusted 2% from the previous week, as of last Friday, according to data from the Mortgage Bankers Association.

While the weaker economic environment has derailed some buyers, an increasing number of for-sale homes has nudged purchasing activity, which continues to lead 2024’s pace, says Joel Kahn, MBA’s vice president and deputy chief economist.

If softer economic indicators—like last week’s jobs report—continue to trickle in, mortgage rates could steadily decline. The opposite could ramp them back up.

Slower growth in home prices could continue to alleviate costs for some buyers. Prices rose 2.3% in May from last year, down from the 2.7% annual gain in April, according to data from the S&P CoreLogic Case-Shiller home price indices posted July 29. Yearly price gains slowed for the fourth month in a row in May.

Home financing costs, however, won’t be the sole determinant of prices and demand. As the market calibrates to elevated mortgage rates—which have hovered just under 7%—financial constraints, subdued transactions, and region-dependent dynamics could also soften price increases.

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