Mortgage rates fall to lowest level in a year. What it means

US mortgage rates have fallen to some of their lowest levels in over a year with the 30-year fixed-rate mortgage dropping to 6.47%.

Yahoo Finance housing reporter Dani Romero joins Market Domination to break down the movements in mortgage rates in relation to the Federal Reserve's interest rate policy, while also discussing what recent homebuilder earnings may indicate about the US housing market.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Nicholas Jacobino

Video transcript

Mortgage rates falling this week to their lowest level in over a year.

Yah finances Danny Romero joins us Now with more.

We've been waiting for some kind of decline like this.

Break it down for it's finally happening.

Good news for potential home buyers and even homeowners themselves.

UH, the mortgage rates fell to the lowest level in over a year.

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

The drop in mortgage rates does come as there is expectation that the Fed will cut rates this fall next month, UH, which has brought long term bond yields to fall, which is also pushing mortgage rates down.

Now, remember, the Fed doesn't, uh, set mortgage rates, but its policies do influence the direction of where mortgage rates are going.

But this has been an opportunity for potential, uh, home own buyers that that to come out of the woodwork if mortgage rates continue to keep falling.

We've already seen that, uh, the refinancing activity has come up.

We've seen a boost last week about 16% applications to finance.

That's what Mortgage Bankers Association reported now.

But we also have seen the housing market kind of turn the other way in favour of the buyer and the seller.

We've seen the total number of homes actually increase about 36% in July.

That's what Realtor reported, and some industry experts say that the housing market could be normalising soon.

So given all that, what do we see?

The home?

So home builders?

A handful of home builders have reported second quarter earnings over the past few weeks.

Now home builders are expecting that mortgage rates to come down.

But that doesn't mean that they're going to take the pedal off the incentive levels that they have been offering.

The most popular one has been the mortgage rate by down.

That's when the builder upfronts the cost to lower the rate on the loan.

That's not going anywhere.

And especially now that inventory is rising on the resale side of things.

There's more competition for them, so more of an incentive to keep those incentives on the table, especially for uh, cautious buyers that are really looking to get into the housing market.

Bottom line mortgage rates is a positive thing for the home builders.

And we're seeing some of those stocks pop about 2% today on the heels of the of mortgage rates coming down.

All right.

Thank you.

Appreciate the update.