Mortgage rates in the United States have decreased for the sixth consecutive week, a development that may energize potential homebuyers as the spring season traditionally marks increased purchasing activity. According to Freddie Mac, the average rate for a 30-year mortgage dropped from last week’s rate of 6.85% to 6.76%. One year ago, this rate stood slightly higher at 6.94%.
Additionally, 15-year fixed-rate mortgages, commonly chosen by homeowners looking to refinance, saw a decline in rates as well. The average rate this week decreased to 5.94% from the previous 6.04%, whereas a year ago, it was 6.26%.
Despite these reductions, the dip in mortgage rates has yet to significantly impact affordability for many potential homebuyers, particularly first-time purchasers, who might not have existing home equity to leverage when buying a new property.
Earlier in the year, sales of pre-owned homes in the U.S. experienced a decline in January. Increasing mortgage rates compounded with rising home prices presented barriers for many interested buyers, even as more properties became available on the market. Data reflecting new pending home sales—a predictive measure of future sales completions—revealed a record low in January, suggesting possible continued declines in the upcoming months.
Currently, the mortgage rate for a 30-year loan is at its lowest since December 19, when it was also measured at 6.72%. Rates briefly dropped to a two-year low last September, but have generally hovered near 7% this year. This remains significantly higher than the approximate 2.65% record low from a bit over four years ago.
Sam Khater, Freddie Mac’s chief economist, pointed out that the combination of falling mortgage rates and slightly improved housing inventory is a positive indicator for those in the market for a home. The inventory of homes for sale in the U.S. increased last month to its highest since June 2020, as per Redfin’s data. However, many potential buyers still find the persistent interplay of high mortgage rates and home prices unaffordable.
Several factors influence mortgage rates, such as the bond market’s reaction to the Federal Reserve’s decisions on interest rates. The recent reduction in rates corresponds to a decrease in the 10-year Treasury yield, used by lenders as a benchmark for setting home loan rates.
The yield, which stood at 4.79% in mid-January, has mostly decreased since, reflecting bond investors’ concerns over the potential impact of tariffs and other proposed policies. As of midday trading on Thursday, the 10-year yield was at 4.28%.
