The average rate on a 30-year U.S. mortgage dropped to its lowest level in 10 months at 6.56%, but remains near recent weeks. 15-year fixed-rate mortgages held steady at 5.69%. Rates have been affecting the housing market slump since early 2022, despite recent declines. Economists expect rates to stay in the mid-6% range this year.

Mortgage rates are influenced by various factors, including the Federal Reserve’s decisions and bond market expectations. The main indicator is the 10-year Treasury yield, at 4.21% on Thursday. It has been easing since mid-July due to inflation, the job market, and potential impacts of Trump’s tariffs on the Fed’s interest rate policy.

Federal Reserve Chair Jerome Powell suggested a possible rate cut despite elevated inflation risks. The Fed has been cautious about rate cuts due to inflation concerns, but slow hiring has increased speculations about a rate cut next month. A rate cut could boost the economy, but also fuel inflation and raise mortgage rates.

While a Fed rate cut may not directly affect mortgage rates, it could impact overall economic conditions. Data on contract signings indicate sluggish home sales in the near future, with pending home sales falling 0.4% in July. There is a lag between contract signings and finalized sales, making pending home sales a predictor of future completed sales.

Read more at Yahoo Finance: Average rate on a 30-year mortgage slips to 10-month low