Mortgage Rates Dip to Lowest Level in Nearly a Year, Offering Hope to Buyers

After months of stubbornly high borrowing costs, would-be homebuyers and homeowners looking to refinance are finally getting some relief.

The average 30-year fixed mortgage rate fell to 6.58% for the week ending August 14—the lowest level since last October—according to Freddie Mac data released Thursday.

This decline comes on the heels of new economic signals suggesting the U.S. labor market is cooling more sharply than expected. July's jobs report revealed not only weaker hiring but also significant downward revisions to previously reported employment figures. That shift has fueled investor expectations that the Federal Reserve will begin cutting interest rates in September.

"The recent slide in mortgage rates was triggered by July's employment report from the Bureau of Labor Statistics," explained Kara Ng, senior economist at Zillow Home Loans. "Significant downward revisions to prior months' data reshaped the narrative of a robust labor market, revealing one that is cooling faster than previously thought."

While the Fed doesn't directly control mortgage rates, its policy moves heavily influence the 10-year Treasury yield, which in turn drives borrowing costs for home loans.

For much of the past year, mortgage rates hovered just under 7%, sidelining buyers and slowing down sales. Homes have lingered on the market longer, with more sellers resorting to price cuts or incentives to attract offers. Zillow data shows that in many cities, the balance of power has shifted away from sellers and toward buyers.

Still, it remains uncertain whether the latest drop will be enough to reignite housing demand. Some buyers may wait to see if rates fall further before jumping back in.

Even so, early signs of renewed activity are emerging. "Purchase application activity is improving as borrowers take advantage of the decline in mortgage rates," said Sam Khater, chief economist at Freddie Mac.

For now, the market stands at a potential turning point—buyers may find themselves with both lower borrowing costs and increased negotiating power, a rare combination in recent years.

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