The average long-term mortgage rates in the United States declined this week, reaching the lowest level since mid-May. This decrease eases borrowing costs for potential homebuyers. The fixed-rate 30-year mortgage rate dropped from 6.49% last week to 6.43%, according to Freddie Mac’s report on Thursday. A year ago, the average rate was 6.67%.
The average rate has hovered around 6.5% since mid-May and has generally trended upwards following the onset of the war between the United States and Iran in late February. This conflict raised oil prices, contributing to increased inflation, bond yields, and mortgage rates.
The current average rate is the lowest since May 14, when it was 6.36%. Furthermore, the 15-year fixed-rate mortgage costs, a popular choice for refinancing borrowers, also decreased this week. The average rate went down from 5.84% last week to 5.79%. A year ago, it was at 5.8%, as reported by Freddie Mac.
Mortgage rates are influenced by various factors, including Federal Reserve decisions and bond market investor expectations about the economy and inflation. Typically, they follow the ten-year Treasury bond yield, used as a benchmark for setting home loan prices. The ten-year Treasury yield stood at 4.46% by midday Thursday, dropping from 4.48% late Wednesday.
The hope for a resolution between the United States and Iran to end their conflict and reopen the Strait of Hormuz to oil tankers has helped lower oil prices, easing some pressure on bond yields. At the end of February, the average 30-year mortgage rate had briefly dipped below 6% for the first time since late 2022 but hasn’t fallen below that threshold since. Five weeks ago, it hit 6.53%, the highest since August 28.
While long-term mortgage rates remain lower than this time last year, uncertainty about their future amid the ongoing conflict with Iran keeps many prospective homebuyers on the sidelines. According to Lisa Sturtevant, chief economist at Bright MLS, “Buyers and sellers are starting to accept mid-6% rates as the new normal. However, affordability remains a significant constraint on housing market activity, with rates still elevated and home prices continuing to rise.”
Note: This article was translated from English by an AP editor using a generative AI tool.
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