Introduction to Mortgage Rates
The average rate on a 30-year U.S. mortgage fell for the fifth straight week to its lowest level since early April, an encouraging sign for potential buyers who have wrestled with rising home prices.
By MATT OTT, Associated Press
NEW YORK (AP) — The long-term rate fell to 6.67% from 6.77% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.95%.
Current Mortgage Rates
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, fell to 5.80% from 5.89% last week. A year ago, it was 6.25%, Freddie Mac said.
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.
Impact on the Housing Market
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.
High borrowing costs are also putting pressure on the new home market. Last week, the government reported that sales of new U.S. homes fell nearly 14% in May from the previous month.
Future Outlook
Recent data suggests sales could pick up in the coming months, especially with the recent decline in mortgage rates. A seasonally adjusted index of pending U.S. home sales rose 1.8% in May from the previous month and increased 1.1% from May last year, the National Association of Realtors said last week.
There’s usually a month or two lag between a contract signing and when the sale is finalized, which makes pending home sales a bellwether for future completed home sales.
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 4.33% at midday Thursday, down from 4.58% just a few weeks ago.
Recent Trends
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%.
Mortgage rates have now fallen five weeks in a row, reflecting the recent pullback in bond yields.
The recent decline in mortgage rates appears to have encouraged some home shoppers. Last week, mortgage applications rose 2.7% from a week earlier, according to the Mortgage Bankers Association.
Conclusion
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.
Originally Published: July 3, 2025 at 12:20 PM EDT
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 6.67%.
Q: How have mortgage rates changed over the past year?
A: Mortgage rates have fallen from an average of 6.95% a year ago to 6.67% currently.
Q: What factors influence mortgage rates?
A: Mortgage rates are influenced by several factors, including the Federal Reserve’s interest rate policy decisions and bond market investors’ expectations for the economy and inflation.
Q: What is the outlook for the housing market?
A: Recent data suggests that sales could pick up in the coming months, especially with the recent decline in mortgage rates.
Q: What is the current 10-year Treasury yield?
A: The current 10-year Treasury yield is 4.33%.
