US 30-Year Mortgage Rate Drops to 6.65%, Ending Two-Week Rise

This week saw a minor decrease in the typical interest rate for a 30-year mortgage across the U.S., which is good news for those looking to buy homes during the season when the real estate market usually peaks.

The rate dropped to 6.65% from 6.67% the previous week, according to mortgage buyer Freddie Mac on Thursday. Compared to this time last year when the rate was averaging 6.79%, there has been a slight decrease.

This marks the first decrease in the average rate following two consecutive increases. Since mid-January, when rates peaked at slightly above 7%, the average rate has been trending downward, providing some respite for potential buyers finding it difficult to purchase homes amid persistently high costs.

The borrowing expenses for 15-year fixed-rate mortgages, commonly chosen by homeowners looking to refinance their home loans, increased this week. This rise pushed the average interest rate up to 5.89% from 5.83% recorded the previous week. According to Freddie Mac, a year earlier, the average rate was 6.11%.

Mortgage rates can be affected by several elements such as bond market investors' predictions of upcoming inflation, international demand for U.S. Treasuries, and the monetary policies set by the Federal Reserve regarding interest rates.

This year’s decrease in the typical interest rate for a 30-year mortgage generally aligns with shifts in the 10-year Treasury yield, which financial institutions reference when setting prices for housing loans.

The yield, which had approached 4.8% in mid-January, has generally declined since then, mirroring increasing apprehension regarding the Trump administration’s actions. rising taxes on goods brought in from elsewhere , where economists caution might push inflation up, causing harm economic growth The yield stood at 4.37% during the afternoon trade on Thursday.

As long as inflation stays high, bond investors ask for greater rewards, which means that an increase in inflation could lead to increased yields on the 10-year Treasury note, consequently raising mortgage rates.

At present, the economic instability is contributing to reduced mortgage rates, which is motivating potential home purchasers as the spring buying season intensifies.

A benchmark monitoring applications for mortgages to finance home purchases has increased for five consecutive weeks, climbing 1% from the prior week, as reported by the Mortgage Bankers Association. Compared to the same period last year, applications for home buying loans have surged by 7%.

"Potential homebuyers continue to reap benefits from recent stability in mortgage rates this spring, which is evident in the increase in purchase applications," noted Sam Khater, Freddie Mac’s chief economist.

The U.S. housing market experienced a downturn in sales starting in 2022 as mortgage rates increased from their low points during the pandemic period. The previous year saw a decline in the purchases of existing homes within the country. the lowest point in almost three decades .

Lowering mortgage rates and an increase in home listings across the country aided in boosting sales upward in February compared to the prior month even though their performance had declined compared to the previous year.

The latest information indicates potential growth in sales over the next few months. According to the National Association of Realtors' report released Thursday, a gauge tracking anticipated U.S. home purchases climbed by 2% in February compared to January but dropped by 3.6% when contrasted with figures from February last year.

Typically, there’s a delay of one or two months from the date a contract is signed until the transaction is officially closed, making pending home sales a key indicator for upcoming completed home sales.

"Even with the small rise each month, contracts for home sales are still significantly lower than typical historic figures," stated Lawrence Yun, who is NAR's chief economist.