The average long-term U.S. mortgage rate fell to 7.11% this week, marking its fourth weekly decline and offering tentative relief for prospective home shoppers facing elevated borrowing costs and prices, mortgage buyer Freddie Mac said on Thursday.
The average 30-year fixed-rate mortgage declined from 7.18% the previous week. But the balance sheet tells a different story about historical context, as the rate sat at 6.24% at the same time one year prior.
This latest pullback brings borrowing costs down to their lowest level since September 24, when averages hovered at 7.03%. Meanwhile, rates on 15-year fixed-rate mortgages dipped to 6.45% from 6.57% the week prior, down from 5.49% a year ago.
- Rate Trajectory: The 30-year fixed mortgage rate fell to 7.11% in its fourth weekly drop from a peak of 7.4% early last month.
- Monthly Impact: Homebuyers financing a $400,000 loan currently pay roughly $300 more per month compared to periods when rates sat just below 6%.
- Macro Pressure: Persistently high inflation keeps open the possibility of further Federal Reserve rate adjustments at the December meeting.
Home loan rates are influenced by inflation, Federal Reserve policy, and bond-market expectations, generally tracking the trajectory of the 10-year Treasury yield. The 10-year Treasury yield traded at 5.10% at midday on Thursday, down from a surge above 5.30% in early October that marked its highest level since 2002.
Until recent weeks, mortgage rates climbed steadily from late February, when the U.S. war with Iran pushed up oil prices and drove inflation higher. That conflict-driven spike also triggered bond market volatility and lifted yields well above their pre-war level of 3.97%.
Although rates have eased over the last month, the 30-year average remains above 7%. Persistent inflation has increased the probability that the Federal Reserve will raise its key interest rate at its upcoming December meeting, following a pause late last month and a hike in September.
U.S. home sales remained sluggish throughout the year due to elevated borrowing costs that add hundreds of dollars to monthly payments and limit purchasing power. Sales of previously occupied U.S. homes slowed to their lowest annual pace in over 16 years as mortgage rates surged.
In late February, the average 30-year mortgage briefly dipped to 5.98%, offering a brief window at late-2022 lows. The broader housing market has remained constrained since 2022, when mortgage rates began climbing from pandemic-era lows, leaving sales of previously occupied homes essentially flat last year at a 30-year low.
| Loan Product | Current Week Rate | Previous Week Rate | Rate One Year Ago |
|---|---|---|---|
| 30-Year Fixed-Rate Mortgage | 7.11% | 7.18% | 6.24% |
| 15-Year Fixed-Rate Mortgage | 6.45% | 6.57% | 5.49% |
Individual borrowers may qualify for rates above or below the national average depending on personal income, credit profiles, and other financial factors. Freddie Mac reported the regional and national data as market participants monitor upcoming central bank decisions.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
