This increase pushed the index, which tracks mortgage loan application volume, to its highest point since January 2023. A significant part of this rise was due to a 35% increase in mortgage refinance applications from the previous week. Compared to the same period last year, refinance applications have surged by 118%, making this the strongest week for refinancing since May 2022, according to the industry group.

As of August 8, the average rate for a 30-year fixed-rate mortgage was 6.47%, the lowest since May 2023, according to mortgage giant Freddie Mac. This drop in rates has enticed more potential homebuyers and borrowers back into the mortgage market, economists say.

The Consumer Price Index (CPI) showed a slowdown in July compared to the previous year, signaling that inflation is easing. This trend strengthens the likelihood that the Federal Reserve will reduce interest rates at its upcoming meeting.

According to the Bureau of Labor Statistics, overall inflation in July was 2.9% compared to the same month last year, down from 3% in June and slightly lower than economists had predicted.

This latest report is a significant milestone in the Federal Reserve’s efforts to combat rapid price increases. It’s the first time since 2021 that inflation has fallen below 3%. Although prices are still rising faster than the pre-pandemic norm of 2%, they have significantly cooled from the 9.1% peak observed two years ago.

What does this mean for investors?

Commercial lenders have started adjusting their rates to factor in a potential rate drop. Rates are now as low as 6.75% for acquisitions and the refinancing of existing rental properties. If there ever was a time to buy turnkey rentals, employ the BRRRR strategy or refinance your existing turnkey rentals, it is now.

And this is good news for fix and flip investors. With more retail buyers entering the market, you should start to see an increase in showings and offers.

Last week, I listed one of our 3/2 turnkey townhouses for $89,900 with a section 8 tenant paying $1,025/month and received five offers. Four were above the asking price. Property went under contract the same day.

As long as the economy continues on its positive trajectory, all signs suggest a rise in investor purchases and refinances for the rest of the year. However, investors should remain cautious and avoid becoming overly aggressive. It’s important to focus on your core principles fundamentals and closely monitor market changes as we move into the fourth quarter.