Mortgage rates moved lower for the second consecutive week, sending purchase applications higher in further signs of pent-up demand amid an ongoing affordability crisis in the housing market.
Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage dropped to 6.69% – the lowest since October – from last week's reading of 6.81%. The average rate on a 30-year loan was 7.03% a year ago.
Many would-be buyers and sellers are holding out to see if rates fall further. Currently, about 80% of mortgage holders have a rate below 5%, according to a Zillow survey from earlier this year.
"This week, mortgage rates decreased to their lowest level in over a month," said Sam Khater, Freddie Mac’s chief economist. "Despite just a modest drop in rates, consumers clearly have responded as purchase demand has noticeably improved. The responsiveness of prospective homebuyers to even small changes in rates illustrates that affordability headwinds persist."
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The average rate on the 15-year fixed mortgage fell to 5.96% from 6.10% last week. One year ago, the rate on the 15-year fixed note averaged 6.29%.
