The average rate on a 30-year mortgage in the U.S. eased again this week, modest relief for prospective home shoppers during what’s traditionally the busiest time of the year for the housing market.
The rate fell to 6.76% from 6.81% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.22%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell. The average rate dropped to 5.92% from 5.94% last week. It’s down from 6.47% a year ago, Freddie Mac said.
Mortgage rates are influenced by several factors, including global demand for U.S. Treasurys, the Federal Reserve’s interest rate policy decisions and bond market investors’ expectations for future inflation.
After climbing to a just above 7% in mid-January, the average rate on a 30-year mortgage has remained above 6.62%, where it was just three weeks ago. It then spiked above 6.8% the next two weeks, reflecting volatility in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
The yield, which had mostly fallen after climbing to around 4.8% in mid-January, surged last month to 4.5% amid a sell-off in government bonds triggered by investor anxiety over the Trump administration’s trade war.
The 10-year Treasury yield was at 4.23% in midday trading Thursday, up from 4.17% late Wednesday.
As mortgage rates decline, they help give homebuyers more purchasing power. While down from a year ago, mortgage rates haven’t come down enough to encourage more home shoppers at a time when real estate prices are still rising nationally, albeit more slowly, and the number of properties on the market has risen sharply from a year ago.
It’s one reason the spring homebuying season is off to a lackluster start. Sales of previously occupied U.S. homes fell in March, posting the largest monthly drop since November 2022.
An index that tracks home loan applications fell 4.2% last week from a week earlier, according to the Mortgage Bankers Association. That was the index’s second straight weekly drop, although it was up 16.5% from a year earlier.
“Mortgage applications fell for the second consecutive week as uncertainty continues to impact many buyers’ decisions to enter the housing market,” said MBA CEO Bob Broeksmit.
Economists expect mortgage rates to remain volatile in coming months, though they generally call for the average rate on a 30-year mortgage to remain above 6.5% this year.
“Homebuyers would like to see rates come down further, but it is becoming more likely that they will remain in the high 6% range this spring,” said Lisa Sturtevant, chief economist at Bright MLS.
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