The average rate on a 30-year mortgage in the U.S. eased for the sixth week in a row, a welcome boost in purchasing power for home shoppers just as the annual spring homebuying season gets going.
The average rate fell 6.76% from 6.85% last week, mortgage buyer Freddie Mac said Thursday. A year ago, it averaged 6.94%.
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 fell to 5.94% from 6.04% last week. A year ago, it averaged 6.26%, Freddie Mac said.
The steady decline in mortgage rates rates this year hasn’t been enough to change the affordability equation for many prospective home shoppers, especially first-time buyers who don’t have equity from an existing home to put toward a new home purchase.
Sales of previously occupied U.S. homes fell in January as rising mortgage rates and prices froze out many would-be homebuyers despite a wider selection of properties on the market.
New data on pending home sales, a bellwether for future completed sales, point to potentially further sales declines in coming months. They slid to an all-time low in January.
The average rate on a 30-year mortgage is now at its lowest level since Dec. 19, when it was also 6.72%. It briefly fell to a 2-year low last September, but has been mostly hovering around 7% this year. That’s more than double the 2.65% record low the average rate hit a little over four years ago.
“The drop in mortgage rates, combined with modestly improving inventory, is an encouraging sign for consumers in the market to buy a home,” said Sam Khater, Freddie Mac’s chief economist.
The inventory of U.S. homes on the market climbed last month to its highest level since June 2020, according to data from Redfin. But mortgage rates and prices remain an unaffordable combination for many would-be homebuyers.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions.
The latest pullback in rates echoes a decline in the 10-year Treasury yield, which lenders use as a guide for pricing home loans.
The yield, which was at 4.79% in mid-January, has been mostly easing since then, reflecting worries among bond investors over the potential impact from tariffs and other policies proposed by the Trump administration.
The 10-year yield was at 4.28% in midday trading Thursday.
