Average Long-term US Mortgage Rate Eases to 6.81%, 3rd Straight Decline

Introduction to the Current Mortgage Rate Trend

The average rate on a 30-year U.S. mortgage has eased for the third week in a row, presenting a welcome trend for prospective homebuyers who have been facing the challenges of elevated borrowing costs in the housing market. This decline is significant as it indicates a potential shift in the mortgage landscape, which has been a drag on the housing market.

Current Mortgage Rates

The long-term rate fell to 6.81% from 6.84% last week, according to mortgage buyer Freddie Mac. Notably, a year ago, the rate averaged 6.87%. Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also experienced a decrease. The average rate eased to 5.96% from 5.97% last week, whereas a year ago, it was 6.13%, as reported by Freddie Mac.

Factors Influencing Mortgage Rates

Mortgage rates are influenced by a variety of factors, including the Federal Reserve’s interest rate policy decisions and bond market investors’ expectations for the economy and inflation. The 10-year Treasury yield serves as a key barometer, which lenders use as a guide to pricing home loans. As of midday Wednesday, the 10-year Treasury yield was at 4.35%, down from 4.58% just a few weeks ago.

Historical Context of Mortgage Rates

The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, set in mid-January. The 30-year rate’s low point this year was in early April when it briefly dipped to 6.62%. With the latest decline, the average rate is now back to where it was in mid-May, reflecting a recent pullback in bond yields.

Impact of High Mortgage Rates on the Housing Market

High mortgage rates can significantly add hundreds of dollars a month in costs for borrowers and reduce their purchasing power. This has contributed to keeping the U.S. housing market in a sales slump that dates back to 2022, when mortgage rates began to climb from the rock-bottom lows they reached during the pandemic. Last year, sales of previously occupied U.S. homes sank to their lowest level in nearly 30 years. Sales remain weak this year, most recently dampening the spring homebuying season.

Effects on the New-Home Market

Elevated borrowing costs are also squeezing the new-home market. Homebuilders broke ground on fewer homes last month than economists expected, as reported by the government on Wednesday. A closely watched measure of homebuilder sentiment sank this month to its third-lowest reading since 2012, reflecting builders’ worries over the impact that mortgage rates and economic uncertainty are having on demand for new homes.

Conclusion

The easing of the average long-term U.S. mortgage rate to 6.81% marks a third consecutive decline, offering some relief to prospective homebuyers. However, the housing market remains challenged by elevated borrowing costs. As the market continues to evolve, it’s crucial for buyers and sellers to stay informed about the trends and factors influencing mortgage rates.

FAQs

• Q: What is the current average rate on a 30-year U.S. mortgage?
  A: The current average rate on a 30-year U.S. mortgage is 6.81%, as of the latest report.
• Q: How have 15-year fixed-rate mortgages been affected?
  A: The average rate on 15-year fixed-rate mortgages eased to 5.96% from 5.97% last week.
• Q: What factors influence mortgage rates?
  A: Mortgage rates are influenced by the Federal Reserve’s interest rate policy decisions, bond market investors’ expectations for the economy and inflation, and the 10-year Treasury yield.
• Q: How are high mortgage rates impacting the housing market?
  A: High mortgage rates are adding hundreds of dollars a month in costs for borrowers, reducing their purchasing power, and contributing to a sales slump in the U.S. housing market.
• Q: What is the outlook for the new-home market?
  A: The new-home market is being squeezed by elevated borrowing costs, with homebuilders breaking ground on fewer homes than expected and homebuilder sentiment sinking due to concerns over mortgage rates and economic uncertainty.

  By ALEX VEIGA, AP Business Writer

  MCCLEAN, Va. (AP) — The average rate on a 30-year U.S. mortgage eased for the third week in a row, a welcome trend for prospective homebuyers at a time when elevated borrowing costs remain a drag on the housing market.

  Originally Published: June 18, 2025 at 12:11 PM EDT