Mortgage rates have fallen to their lowest level in 10 months, a development that provides fresh ammunition to President Donald Trump to intensify calls for more aggressive interest rate cuts from the Federal Reserve.
Lower Mortgage Rates Good For Homebuyers?
According to the Primary Mortgage Market Survey released Thursday by Freddie Mac (OTC:FMCC), the average rate on a 30-year fixed-rate mortgage (FRM) now stands at 6.58%, down from 6.63% the previous week.
The 15-year FRM also retreated to 5.71%. These figures represent the lowest point for mortgage rates since October 2024, signaling a potential easing in borrowing costs that have kept the housing market constrained.
The decline offers some relief to prospective homebuyers, though it also fuels debate over the potential for reigniting housing price inflation.
While the recent dip is notable, Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, provided broader context in a post on X. She pointed out that while the 30-year rate “has fallen to 6.67%… it is almost unchanged year/year,” highlighting the prolonged period of elevated rates that homeowners have faced.
Trump To Increase Pressure Following Low Mortgage Rates
The downward trend in rates is closely tied to investor expectations that the Federal Reserve will continue its rate-cutting cycle, with a potential cut anticipated as early as September.
In a post on X, The Kobeissi Letter suggested the current environment is “clearing a path for Trump to get rate cuts, even as inflation re-accelerates.”
Kobeissi forecasted the potential impact if such calls for deeper cuts were realized, stating that if the Fed’s target rate fell to around 1%, mortgage rates could drop to around 3%.
In that scenario, they predict “already record high housing prices will explode,” with a potential surge of 10%+ in the first year. This outlook underscores the delicate balance the central bank faces between stimulating the housing market and preventing another surge in home prices.
Price Action
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, ended mixed on Thursday. The SPY was up 0.0093% at $644.95, while the QQQ declined 0.078% to $579.89, according to Benzinga Pro data.
On Friday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading higher.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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