Introduction to Mortgage Rates
The average rate on a 30-year U.S. mortgage fell this week to its lowest level in more than a year, extending a recent trend that’s helped give lagging U.S. home sales a boost. The average long-term mortgage rate fell to 6.19% from 6.27% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.54%.
By ALEX VEIGA, AP Business Writer
Current Mortgage Rate Trends
This is the third straight weekly decline and it brings the average rate to its lowest level since Oct. 3, 2024, when it was 6.12%. Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also eased this week. The average rate dropped to 5.44% from 5.52% last week. A year ago, it was 5.71%, Freddie Mac said.
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. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The 10-year yield was at 3.99% at midday Thursday, not far from around 3.97% the same time last week.
Impact on the Housing Market
The average rate on a 30-year mortgage has remained above 6% since September 2022, the year mortgage rates began climbing from historic lows. The housing market has been in a slump ever since. Sales of previously occupied U.S. homes sank last year to their lowest level in nearly 30 years. Sales have remained sluggish this year, but accelerated last month to their fastest pace since February as mortgage rates eased.
Federal Reserve’s Role
Mortgage rates started declining in July in the lead-up to the Federal Reserve’s decision last month to cut its main interest rate for the first time in a year amid growing concern over the U.S. job market. At their September policy meeting, Fed officials forecast that the central bank would reduce its rate twice more this year and once in 2026. Still, the Fed could change course if inflation jumps amid the Trump administration’s expanding use of tariffs and the recent trade war escalation with China.
Mortgage Applications and Refinancing
Even if the Fed opts to cut its short-term rate further that doesn’t necessarily mean mortgage rates will keep declining. Last fall, after the Fed cut its rate for the first time in more than four years, mortgage rates marched higher, eventually reaching just above 7% in January this year. The late-summer pullback in rates has helped spur homeowners who bought in recent years after rates climbed above 6% to refinance their home loan to a lower rate. Mortgage applications, which include loans to buy a home or refinance an existing mortgage, slipped 0.3% last week from a week earlier, according to the Mortgage Bankers Association. But applications for mortgage refinance loans made up nearly 56% of all applications, a slight increase from the previous week.
Adjustable-Rate Mortgages
Many prospective homebuyers are also turning to adjustable-rate mortgages. Such loans, which typically offer lower initial interest rates than traditional 30-year, fixed-rate mortgages, accounted for 10.8% of all mortgage applications last week. Mortgage rates will have to drop below 6% to make refinancing an attractive option to a broader swath of homeowners, however. That’s because about 80% of U.S. homes with a mortgage have a rate below 6% and 53% have a rate below 4%, according to Realtor.com.
Conclusion
In conclusion, the recent drop in average long-term US mortgage rates to 6.19% is a positive sign for the housing market, which has been struggling with low sales. As mortgage rates continue to decline, we can expect to see an increase in mortgage applications and refinancing, which could help boost the housing market. However, the Federal Reserve’s interest rate policy decisions and inflation expectations will continue to play a significant role in shaping mortgage rates.
FAQs
Originally Published: October 23, 2025 at 12:07 PM EDT
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 6.19%.
Q: How has the housing market been affected by the recent decline in mortgage rates?
A: The housing market has seen an increase in sales and mortgage applications, particularly for refinancing, as a result of the decline in mortgage rates.
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 outlook for mortgage rates in the coming months?
A: The outlook for mortgage rates is uncertain and will depend on the Federal Reserve’s interest rate policy decisions and inflation expectations.
