US Long-Term Mortgage Rate Dips to 7.32% in First Drop Since August

Mortgage rates declined this week for the first time since late August, offering modest relief to prospective homebuyers contending with elevated borrowing costs.

The average rate on a 30-year fixed mortgage fell to 7.32%, down from 7.40% a week earlier, mortgage buyer Freddie Mac reported Thursday. A year ago, the benchmark rate stood at 6.19%.

The average rate for a 15-year fixed mortgage also edged lower, slipping to 6.68% from 6.71% last week. The loan type is often favored by homeowners refinancing their mortgages. One year ago, the 15-year rate averaged 5.44%.

Mortgage rates are shaped by several economic forces, including inflation, Federal Reserve policy and bond investors’ expectations for the economy. They typically move in line with the 10-year Treasury yield, which lenders use as a benchmark when setting home loan prices.

Home loan rates have risen since late February, when the U.S. war with Iran drove oil prices higher and added to inflationary pressure. Increased volatility in the bond market has also contributed to the climb by pushing up yields on U.S. Treasury securities.

The 10-year Treasury yield has eased for most of the past two weeks after reaching its highest point since 2002. That retreat has helped the average 30-year mortgage rate stabilize after it climbed to 7.4%, the highest level in nearly three years.

The 10-year Treasury yield was at 5% around midday Thursday in bond-market trading. It had jumped above 5.30% earlier this month and remains well above the 3.97% level recorded before the war with Iran.

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U.S. home sales have remained stalled this year, largely because higher mortgage rates can add hundreds of dollars to borrowers’ monthly payments. The added expense reduces buyers’ purchasing power and has led many would-be homeowners to delay their plans.

In late February, the average 30-year mortgage rate briefly fell to 5.98%, its lowest level since late 2022. Since then, the increase in rates has added about $355 to the monthly payment on a $400,000 home loan, based on the latest average rate.

Individual borrowers may receive a mortgage rate above or below the national average, depending on factors such as income, credit history and other financial qualifications.

The U.S. housing market has been mired in a slump since 2022, when mortgage rates began moving up from pandemic-era lows. Sales of previously owned homes were essentially unchanged last year, remaining at a 30-year low.

In its latest projection, mortgage buyer Fannie Mae expects the average 30-year mortgage rate to reach 7.4% in the final quarter of this year and 7.5% in 2027.