Average long-term US mortgage rate eases to 6.74%, keeping home loan borrowing costs elevated
By JOHN DOE
In the latest update, the average rate on a 30-year U.S. mortgage saw a slight decrease, offering limited relief to potential homebuyers amidst soaring home prices.
The long-term rate fell to 6.74% from 6.75% last week, according to Freddie Mac’s report on Thursday. Comparatively, a year ago, the rate stood at 6.78%.
Furthermore, borrowing costs for 15-year fixed-rate mortgages, favored by homeowners looking to refinance, also saw a decline. The average rate dropped to 5.87% from 5.92% last week. A year ago, it was at 6.07%, as per Freddie Mac’s data.
The prevailing high mortgage rates have been a significant factor impacting the U.S. housing market, which has been experiencing a sales decline since 2022 when rates began to rise from their pandemic-induced lows.
Sales of pre-owned homes in the U.S., which hit a nearly three-decade low in 2024, have continued to lag this year due to increasing home prices and persistently high mortgage rates, making homeownership financially challenging for many Americans.
The elevated mortgage rates have also deterred many homeowners from selling their properties, given that they secured mortgages at much lower rates in the past.
Various factors influence mortgage rates, ranging from the Federal Reserve’s interest rate policies to the bond market investors’ economic and inflation outlook.
The primary gauge is the 10-year Treasury yield, utilized by lenders to determine home loan pricing. The yield stood at 4.41% on Thursday, slightly down from 4.40% the previous day, following indications that the U.S. economy is managing well despite external pressures like tariffs.
Yields have been trending upwards this month as traders anticipate the Fed maintaining its current short-term interest rate at the upcoming meeting, despite President Donald Trump’s calls for rate cuts.
A potential shift in the Fed’s independence could lead to lower short-term rates affecting consumer credit card and auto loan rates, but it might impact long-term bond yields influencing home loan rates differently.
Throughout this year, the average rate on a 30-year mortgage has hovered close to its peak of just over 7%, recorded in mid-January. The lowest point was in early April when it briefly touched 6.62%.
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