Mortgage rates will likely keep falling before a Fed rate cut

Mortgage rates have fallen to the lowest level in more than a year as the average rate on a 30-year fixed mortgage dropped to 6.47% from 6.73%, according to Freddie Mac. Yahoo Finance Senior Housing Reporter Dani Romero breaks down how mortgage rates will most likely continue falling even before a September interest rate cut from the Federal Reserve.

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This post was written by Melanie Riehl

Video Transcript

We've got some good news for home buyers and homeowners mortgage rates have fallen to the lowest level in more than a year.

Raising hopes for relief in the housing market.

Yahoo Finance's Danny Romero has more on why mortgage rates will probably keep falling before the central bank is set to cut interest rates starting next month.

Danny, what do we know Brad finally?

Relief.

There's hope in the housing market, more rates dropped to the lowest level in more than a year.

Freddie Mac reported that the average rate on a 30 year fixed mortgage rate dropped to 6.47% from 6.73% last week.

Now the drop in mortgage rates comes as investors have ramped up their bets that the fed will cut interest rates starting next month.

Now remember mortgage rates aren't directly tied to the fed moves, but they tend to loosely follow the yield yield on the benchmark 10 year Treasury Note, which moves up and down based on the expectations for the economy.

Long term bond yields have fallen this month, which has in turn pushed mortgage rates lower.

Now, this could be an opportunity for potential home buyers to come off the sidelines.

We've already seen homeowners refinance their existing loans as the rates have eased as rates have eased.

Now, applications to refinance a home rose 16% last week from the prior week.

Mortgage Bankers Association reported now, industry experts are expecting that mortgage rates will continue to move lower as bond traders have already priced in a rate cut, but any further drop will likely be limited until there's more certainty on the timing and the size of any initial fed movement.

Brad Danny, thanks so much tracking the data continuing to evaluate what it means for the housing market.

We appreciate it young finances on D Danny Romero.