Average Rate on 30-Year Mortgage Eases for Second Week in a Row, but Remains Just Below 7%
Mortgage Rates Ease for Second Consecutive Week
The average rate on a 30-year mortgage in the United States has eased for the second week in a row, but remains just below 7%, offering little relief to prospective home shoppers looking ahead to the spring homebuying season. According to mortgage buyer Freddie Mac, the rate fell to 6.95% from 6.96% last week.
15-Year Fixed-Rate Mortgages Also See Decline
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also eased this week. The average rate dropped to 6.12% from 6.16% last week.
Influence of Federal Reserve’s Interest Rate Policy Decisions
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions. The average rate on a 30-year mortgage briefly fell to a 2-year low just above 6% last September, but has been mostly rising since then, echoing a sharp rise in the 10-year Treasury yield, which lenders use as a guide for pricing home loans.
10-Year Treasury Yield and Bond Market
The yield, which was at 3.62% in mid-September, reached 4.79% two weeks ago amid fears inflation may remain stubbornly higher than the Fed’s 2% target. A solid U.S. economy and worries about tariffs and other policies potentially coming from President Donald Trump have also helped push bond yields higher. The 10-year Treasury yield was at 4.53% in midday trading Thursday.
Home Sales Slump
Elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, prolonging a national home sales slump that began in 2022. While sales of previously occupied U.S. homes rose in December for the third month in a row, 2024 was the worst year for home sales in nearly 30 years, worse than 2023, which had been the worst in decades.
Experts Weigh In
“Driven by these higher rates and a persistent supply shortage, affordability hurdles still exist for many homebuyers and a significant number of them remain on the sidelines,” said Sam Khater, Freddie Mac’s chief economist.
Conclusion
The average rate on a 30-year mortgage has eased for the second week in a row, but remains just below 7%. While this may offer some relief to prospective home shoppers, elevated mortgage rates and a persisting supply shortage continue to present hurdles for many buyers.
FAQs
* What is the current average rate on a 30-year mortgage?
The average rate on a 30-year mortgage is 6.95%.
* How has the 10-year Treasury yield changed?
The 10-year Treasury yield was at 3.62% in mid-September and reached 4.79% two weeks ago.
* What is the current rate on 15-year fixed-rate mortgages?
The average rate on 15-year fixed-rate mortgages is 6.12%.
* Why are mortgage rates rising?
Mortgage rates are influenced by the Federal Reserve’s interest rate policy decisions and the 10-year Treasury yield, which can be affected by factors such as inflation, tariffs, and economic growth.
