US 30-year mortgage rate drops to 15-month low

STORY: The interest rate on America’s most popular home loan fell to its lowest level in 15 months.

That’s according to the Mortgage Bankers Association, which said Wednesday that the average rate on a 30-year mortgage has dropped to 6.55%.

This comes after the Federal Reserve signaled at its last meeting that it could start cutting interest rates in September.

And a weaker-than-expected July jobs report reinforced financial market bets that interest rate cuts would be large.

The Fed held rates steady at the end of its July meeting but said it is now as focused on the health of the labor market as it is on reducing inflation.

San Francisco Fed President Mary Daly said the change in communication has translated into lower mortgage rates as investors anticipate the central bank’s next move, adding (quote):

“You already see the policy working, even before we cut the rate.”

The decline in 30-year mortgages provides potential home buyers with some long-awaited relief in a housing market that has become increasingly unaffordable in recent years as home prices and borrowing costs have risen.

The average 30-year mortgage rate peaked at 7.9% last October.