The average rate for a 30-year fixed mortgage in the United States has continued its recent downward trend, providing a slight but significant advantage for homebuyers as the spring purchasing season unfolds. According to mortgage buyer Freddie Mac, the rate decreased to 6.64%, a hair lower than last week’s 6.65%. This is also a noticeable drop from last year’s average of 6.82%.
Since reaching over 7% earlier in January, rates have gradually declined, enhancing the buying capacity of potential homeowners. Additionally, the cost to borrow on 15-year fixed-rate mortgages, which is often favored by those refinancing, also decreased this week. The average rate now stands at 5.82%, down from 5.89% the week prior. A year ago, this rate was around 6.06%.
Fluctuations in mortgage rates are typically the result of various influences, including investors’ expectations regarding future inflation, the global demand for U.S. Treasurys, and the Federal Reserve’s decisions concerning interest rates. This year’s overall drop in the average 30-year mortgage rate roughly mirrors changes in the 10-year Treasury yield—a key indicator that lenders use to set mortgage pricing.
Back in January, the yield was nearing 4.8%, but it has mostly decreased, reflecting signs of an economic slowdown and concerns that tariffs from the previous administration might impede growth and spur inflation. By Thursday, the yield had fallen to 4.06% amidst a sharp sell-off on Wall Street, prompting speculation among bond investors that the Federal Reserve might need to lower its main interest rate if the economic situation worsens.
Senior economist Joel Berner from Realtor.com commented, “The 10-year Treasury has dipped further this morning as investors exit the stock market, indicating that mortgage rates will likely continue to fall in the upcoming months. This disruption will impact the housing market through the rest of the year.”
Housing economists have anticipated that throughout this year, the average rate on a 30-year mortgage could hover around 6.5%. Lower mortgage rates can stimulate home sales by making ownership more accessible. However, economic uncertainties, such as job security concerns or market fluctuations affecting stock investments, might deter some Americans from purchasing homes.
Berner added, “It remains uncertain whether the relief from mortgage rates will push buyers to act in 2025 or if broader economic issues will slow the market down.” The U.S. housing market has experienced a slowdown since 2022, with mortgage rates rising from pandemic-era lows. Consequently, sales of pre-owned U.S. homes dropped last year to their lowest in nearly three decades.
In February, less expensive mortgage rates and an increase in available homes led to improved sales from the previous month, though they remain below last year’s numbers. Despite the easing of mortgage rates, escalating home prices are still contributing to the high cost of homeownership. According to Redfin, the median monthly payment by U.S. homebuyers reached a new high of $2,802 during the four-week period ending March 20.