This week, the average rate for a 30-year mortgage in the U.S. saw a slight increase, halting a seven-week downward trend that had temporarily reduced borrowing costs for those looking to purchase homes during the spring buying season.
Freddie Mac reported on Thursday that the rate has risen to an average of 6.65%, up from last week’s 6.63%. A year ago, the average rate stood at 6.74%.
Similarly, the rate for 15-year fixed-rate mortgages, which are popular among homeowners seeking to refinance to a lower rate, increased slightly. The average rate for these loans rose to 5.8% from last week’s 5.79%. A year ago, the average was at 6.16%, according to Freddie Mac.
Mortgage rates are subject to various influences, including investors’ expectations for future inflation, the global demand for U.S. Treasuries, and the Federal Reserve’s decisions on interest rates.
After reaching a peak above 7% in mid-January, the average 30-year mortgage rate saw a decline leading up to last week, mirroring movements in the 10-year Treasury yield, which lenders often use to set their mortgage prices.
The 10-year Treasury yield, which was nearing 4.8% in mid-January, has mostly decreased since then due to concerns about economic growth and the impact of the Trump administration’s tariffs on imported goods. As of midday Thursday, the yield stood at 4.31%.
Imposed tariffs can lead to higher inflation, which may result in increased yields on the 10-year Treasury note, consequently driving up mortgage rates, as bond investors require higher returns in times of rising inflation.
On Thursday, the Labor Department reported that U.S. wholesale inflation was milder last month than economists had anticipated, following a similar consumer-level inflation report the previous day, which showed a decrease for the first time since September.
However, the Federal Reserve, which plans to update its interest rate policy next Wednesday, has indicated a cautious stance, carefully considering the trajectory of inflation and the economic impact of the Trump administration’s trade and tax policies.
Despite the easing rates, the affordability of homes remains a challenge for many potential buyers, keeping the housing market in a sales downturn. Nonetheless, as rates have eased recently, a growing number of potential buyers are submitting home loan applications.
According to the Mortgage Bankers Association, mortgage applications last week surged by 11.2% from the previous week and by 31% compared to a year ago. Additionally, refinancing applications jumped by 16%.
While mortgage application increases are typical for this season, the sharp rise suggests that reduced mortgage rates are indeed drawing in potential buyers. Those who can afford current rates or who pay cash benefit from a broader selection of available properties. The number of homes for sale has significantly increased since last year, with national prices rising more slowly and even decreasing in urban areas like Austin, Dallas, and Tampa.
“The blend of slightly lower mortgage rates and improved inventory is promising for homebuyers during this key spring buying season,” stated Sam Khater, chief economist at Freddie Mac.
