The market focuses on more aggressive rate cut calls, and US mortgage rates are rapidly declining

According to the Zhitong Finance and Economics APP, as reported by the "Mortgage News Daily," as of Friday, the most popular 30-year fixed mortgage rate in the United States dropped by 22 basis points to 6.4%, the lowest level since April 2023. The 15-year fixed rate fell to 5.89%, the lowest level since early May 2023. Previously, the monthly employment report fell short of expectations, leading to a rapid decline in bond yields. Mortgage rates generally follow the yield of the 10-year U.S. Treasury bond. Matthew Graham, the Chief Operating Officer of the "Mortgage News Daily," wrote, "Between Federal Reserve Chairman Powell's vague openness to 'multiple rate cuts in 2024' on Wednesday and this morning's significantly lower-than-expected employment report (Powell didn't even know about this report on Wednesday), the more aggressive rate cut rhetoric is quickly becoming the focus." Graham pointed out that before the Fed's September meeting, there are two inflation reports and another employment report. He added, "If these reports fail to provide a strong rebuttal to recent data, the rate cut cycle is not only underway but may come with some sense of urgency." The 30-year fixed rate started the week at 6.81%, so the dramatic drop in just five days is significant. The recent high point was 7.52% in late April, and home sales have been declining since then. Buyers not only face high rates but also high prices and supply shortages. While supply has improved since then, prices remain overheated. The affordability change in just a few months is very significant. In April, a buyer looking to purchase a $400,000 home with a 20% down payment and choosing a 30-year fixed mortgage would face a monthly payment of about $2,240 (excluding insurance and property taxes). Today, this monthly payment is approximately $2,000. More buyers will also qualify for loans at the current lower rates. According to data from the Mortgage Bankers Association, mortgage applications for home purchases are about 15% lower than the same period last year. This latest drop could trigger demand. Mike Fratantoni, Chief Economist of the Mortgage Bankers Association, said, "The market acted before the Fed, lowering long-term rates, including mortgages, which should lead to increased home purchases and refinancing activity."