Introduction to Mortgage Rates
The average rate on a 30-year U.S. mortgage edged up this week, ending a five-week decline in borrowing costs for homebuyers. The long-term rate ticked up to 6.72% from 6.67% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.89%.
By ALEX VEIGA, AP Business Writer
Current Mortgage Rates
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also rose. The average rate increased to 5.86% from 5.80% last week. A year ago, it was 6.17%, Freddie Mac said.
Impact on the Housing Market
High mortgage rates can add hundreds of dollars a month in costs for borrowers and reduce their purchasing power. That’s helped keep 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. They’ve remained sluggish so far this year, as many prospective homebuyers have been discouraged by elevated mortgage rates and home prices that have continued to climb, albeit more slowly.
Factors Influencing Mortgage Rates
Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation. The key barometer is the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The yield was at 4.37% at midday Thursday, up from 4.34% late Wednesday. Yields moved up last week as traders bet that a better-than-expected June jobs report could keep the Fed on hold when it comes to interest rates.
Forecast for 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%. As mortgage rates eased in recent weeks, more home shoppers have been encouraged to wade into the market. Mortgage applications jumped 9.4% last week from the previous week, according to the Mortgage Bankers Association. Economists generally expect mortgage rates to stay relatively stable in the coming months, with forecasts calling for the average rate on a 30-year mortgage to remain in a range between 6% and 7% this year.
Expert Insights
“Mortgage rates may come down modestly over the coming months but other economic headwinds — including the impact of tariffs on the prices of consumer goods, weaker labor market conditions and rising consumer debt — could be what continue to hold the housing market in the second half of 2025,” said Lisa Sturtevant, chief economist at Bright MLS.
Conclusion
In conclusion, the recent increase in the average long-term US mortgage rate to 6.72% marks the end of a five-week decline in borrowing costs for homebuyers. This change, along with other economic factors, is expected to continue influencing the US housing market, which has been in a sales slump since 2022. As economists forecast relatively stable mortgage rates for the coming months, potential homebuyers and homeowners looking to refinance should remain informed about the trends and factors affecting mortgage rates.
FAQs
- Q: What is the current average rate on a 30-year US mortgage?
A: The current average rate on a 30-year US mortgage is 6.72%. - Q: How have mortgage rates influenced the US housing market?
A: High mortgage rates have contributed to a sales slump in the US housing market by increasing borrowing costs and reducing purchasing power for potential homebuyers. - 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: What is the forecast for mortgage rates in the coming months?
A: Economists expect mortgage rates to remain relatively stable, with the average rate on a 30-year mortgage forecasted to stay between 6% and 7% this year.
Originally Published: July 10, 2025 at 12:07 PM EDT
