LOUISVILLE, Ky. — Those in the market for a new home may finally start to see some relief.
Mortgage rates plunged to their lowest levels in over a year Thursday, and interest rate cuts by the Federal Reserve could be in the cards in the near future. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage on Thursday dropped to 6.47% from 6.73% a week ago.
The average rate was 6.95% one year ago.
The 15-year fixed-mortgage rate was 5.63%, down from 5.99% last week. The average 15-year rate was 6.34% a year ago at this time.
"Mortgage rates plunged this week ... following the likely overreaction to a less-than-favorable employment report and financial market turbulence for an economy that remains on solid footing," Freddie Mac chief economist Sam Khater said in a news release. "The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move."
Locally, rates are even better. According to US Bank, the average 30-year fixed rate for a mortgage in Kentucky and Indiana Friday was 6.375%.
Many programs exist to help first-time homebuyers save even more money. You can check out resources for Kentucky here, and Indiana here.
The Fed has signaled an interest rate cut will happen in September for the first time in four years. The move would drive rates down even further, although likely not immediately since many financial markets are expecting the cut.
According to the Associated Press, lower inflation combined with a cooler job market is no longer a threat to "overheat" the economy. Federal Reserve Chair Jerome Powell signaled on July 31 the cut could be coming.
“We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate,” Powell said, “but we’re not quite at that point.”
The focus on both inflation and employment is a major shift after several years of Fed officials focusing exclusively on combatting rising prices.
“They’re ready to cut, just as long as we don’t get an inflation suprise between now and September, which we won’t,” said Mark Zandi, chief economist at Moody’s Analytics. “Better late than never.”
The Associated Press contributed to this report.
