The average 30-year fixed rate mortgage has dropped by 27 basis points to 6.55 per cent, according to the Mortgage Bankers Association in the United States.

This is the lowest it has been since May 2023.

Some have attributed this drop to the Federal Reserve signalling it may start cutting rates next month.

Of concern though, unemployment has increased to 4.3 per cent in July and hiring has slowed down. Early this week the stock market displayed volatility swing low one day, regaining the next. This has set off alarm bells with talk of an imminent recession.

But while mortgage rates are falling, house prices are rising and affordability is proving problematic. 

The median price for a house in many cities across the United States has risen to $426,900, up 4.1 per cent on last year according to the National Association of Realtors.

Many first-time house buyers are looking at US$1 million entry-level houses across the many cities in the United States, according to Zillow.

“The decline in mortgages does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move,” said Freddie Mac’s chief economist Sam Khater.

Ralph Mc Laughlin, senior economist at Realtor.com added, ”The event’s downward trend is encouraging news for potential homebuyers who have been waiting until next year to participate in the market.”