The average rate on a 30-year mortgage in the U.S. fell slightly this week, a welcome reversal for homebuyers in what is traditionally the busiest time of the year for the housing market.
The rate fell to 6.65% from 6.67% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.79%.
This is the first decline in the average rate after rising two weeks in a row. The average rate has been mostly trending lower since mid-January, when it climbed to just over 7% — a welcome trend for aspiring homebuyers struggling to afford a home after years of soaring home prices.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, rose this week, however, pushing the average rate to 5.89% from 5.83% last week. A year ago, it averaged 6.11%, Freddie Mac said.
Mortgage rates are influenced by several factors, including bond market investors’ expectations for future inflation, global demand for U.S. Treasurys and the Federal Reserve’s interest rate policy decisions.
The overall decline this year in the average rate on a 30-year mortgage loosely follows the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
The yield, which was nearing 4.8% in mid-January, has mostly fallen since then, reflecting rising unease over the Trump administration’s escalating tariffs on imported goods, which economists warn could drive inflation higher, hurting economic growth. The yield was at 4.37% in midday trading Thursday.
Bond investors demand higher returns as long as inflation remains elevated, so if inflation ticks upward that could translate into higher yields on the 10-year Treasury note, pushing up mortgage rates.
For now, the economic uncertainty is helping lower mortgage rates, just as the spring homebuying season ramps up.
The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes fell last year to their lowest level in nearly 30 years.
Easing mortgage rates and more homes on the market nationally helped drive home sales higher in February from the previous month, though they were down year-over-year.