The average rate on a 30-year mortgage in the U.S. eased for the second week in a row, but remains just below 7%, little relief for prospective home shoppers looking ahead to the spring homebuying season.
The rate fell to 6.95% from 6.96% last week, mortgage buyer Freddie Mac said Thursday. A year ago, it averaged 6.63%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also eased this week. The average rate dropped to 6.12% from 6.16% last week. A year ago, it averaged 5.94%, Freddie Mac said.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions. The average rate on a 30-year mortgage briefly fell to a 2-year low just above 6% last September, but has been mostly rising since then, echoing a sharp rise in the 10-year Treasury yield, which lenders use as a guide for pricing home loans.
The yield, which was at 3.62% in mid-September, reached 4.79% two weeks ago amid fears inflation may remain stubbornly higher than the Fed's 2% target. A solid U.S. economy and worries about tariffs and other policies potentially coming from President Donald Trump have also helped push bond yields higher.
The 10-year Treasury yield was at 4.53% in midday trading Thursday.
Elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, prolonging a national home sales slump that began in 2022.
While sales of previously occupied U.S. homes rose in December for the third month in a row, 2024 was the worst year for home sales in nearly 30 years, worse than 2023, which had been the worst in decades.
“Driven by these higher rates and a persistent supply shortage, affordability hurdles still exist for many homebuyers and a significant number of them remain on the sidelines,” said Sam Khater, Freddie Mac’s chief economist.
