The average rate on the 30-year mortgage fell below 7 percent after five straight weeks of declines.
The average 30-year mortgage rate in the U.S. fell below 7 percent this week.
The rate fell to 6.96% from 7.04% last week, mortgage broker Freddie Mac said Thursday. A year ago, the average was 6.69 percent.
Borrowing costs on 15-year fixed-rate loans, which are popular among homeowners looking to refinance their mortgages at lower rates, also eased this week. The average rating dropped to 6.16% from last week’s 6.27%. A year ago, the average was 5.96%, Freddie Mac said.
“While affordability issues remain, this is welcome news for homebuyers, as indicated by a modest increase in purchase applications,” said Sam Khatter, Freddie Mac’s chief economist.
Mortgage applications rose last week, but the average rate on a 30-year home loan has risen to 7% in recent weeks, according to the Mortgage Bankers Association.
This week’s decline in mortgage rates reflects a slowdown in bond yields that lenders use as a pricing guide for mortgages, particularly the yield on the US 10-year Treasury. The yield, which was at 3.62% in mid-September, rose to 4.78% early last week following strong reports on the U.S. economy and raised concerns that the Trump administration’s tariffs and other planned policies could raise inflation along with economic growth.
The 10-year Treasury yield was at 4.64% in midday trading Thursday.
Borrowing rates are influenced by many factors, including how the bond market responds to the Federal Reserve’s interest rate policy decisions. Home loan rates are mostly rising, with the Fed last month expecting to cut its benchmark interest rate twice this year, down from the four cuts it predicted in September. Central bank policymakers are due to meet again next week.
Higher mortgage rates, which can cost borrowers hundreds of dollars a month, have discouraged homebuyers and extended a national home sales slump that began in 2022.
While Sales of pre-owned U.S. homes rose in November. For the second straight month, the housing market was 2024 was on track to be the worst year for sales since 1995. Full-year home sales data ends Friday.
Many home buyers have been priced out of the market in recent years as mortgage rates and prices have risen. In the four weeks ended Jan. 19, the average monthly U.S. take-home pay rose to $2,686. This is the highest in seven months.
Mortgage rates are difficult to predict because they are influenced by many factors, from government spending and the economy to geopolitical tensions and fluctuations in the stock and bond markets.