Rates for 30 year mortgage loans dropped to the lowest level in six months, and may help rescue the drop in home purchases.
The latest drop to 6.4% puts 30 year mortgage loans as the lowest level in the past six months.
Back in July, 30 year mortgages had escalated to 6.8%, but a slowing economy and lower energy costs helped control inflation and steadily brought down the mortgage rates.
A slowdown helps the Federal Reserve keep interest rates on hold, and a key interest rate was left unchanged for a consecutive month, meaning the Federal Reserve's need to raise interest rates in order to fight inflation may be coming to an end.
Nutshell: When home sales are hot, this can drive up inflation (costs). And by raising interest rates, less purchases are made and thus drives down costs as realtors and contractors lower costs in order to generate sales. Raising the interest rates helps slow down the economy, similar to putting the brakes on a runaway locomotive.
According to Freddie Mac, the slowing housing market and signs that inflation is leveling off have helped to lower mortgage rates and keep them affordable.
Many analysts believe interest rates will remain around the current rate for the remainder of the year. This will help the housing industry level-off after the recent sharp declines in new home construction.
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