The average rate on a 30-year U.S. mortgage held steady this week at its lowest level in nearly 10 months, an encouraging sign for prospective homebuyers who have been held back by stubbornly high home financing costs.
The long-term rate was unchanged from last week at 6.58%, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.46%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, edged lower. The average rate dropped to 5.69% from 5.71% last week. A year ago, it was 5.62%, Freddie Mac said.
Stubbornly high mortgage rates have helped keep the U.S. housing market in a sales slump since early 2022, when rates started to climb from the rock-bottom lows they reached during the pandemic. Home sales sank last year to their lowest level in nearly 30 years and have remained sluggish this year.
For much of the year, the average rate on a 30-year mortgage has hovered relatively close to its 2025 high of just above 7%, set in mid-January. Since last week, the average rate has been at its lowest level since Oct. 24, when it averaged 6.54%.
Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation.
The main barometer is the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The yield was at 4.34% at midday Thursday, up from 4.29% late Wednesday.
The yield has been mostly rising this month as bond traders weighed how data on inflation and the job market, and the potential economic impact of Trump administration’s tariffs, may influence the Fed’s interest rate policy moves.
The central bank has so far been hesitant to cut interest rates out of fear that Trump’s tariffs could push inflation higher, but data showing hiring slowed last month have fueled speculation that the Fed will cut its main short-term interest rate next month.
A Fed rate cut could give the job market and overall economy a boost, but it could also fuel inflation, which could push bond yields higher, driving mortgage rates upward in turn.
“Even if the Fed cuts the short-term federal funds rate in September, which is largely expected, it is not likely that we will see a big drop in mortgage rates,” said Lisa Sturtevant, chief economist at Bright MLS.
Economists generally expect the average rate on a 30-year mortgage to remain near the mid-6% range this year.
That may not be low enough to spur a meaningful increase in home sales.
While the housing market slowdown is forcing many sellers to lower their asking price and even pay for a buyer’s closing costs, among other incentives, affordability remains a major hurdle for many aspiring homeowners.
Home price growth has slowed nationally, but the median sales price of a previously occupied U.S. home remains near the all-time high of $435,300 set in June. And while prices are down from a year ago in many metro areas in the South and West such as Miami, Denver and Austin, they haven’t come down nearly enough to offset years of soaring prices.
“Lower mortgage rates and slower price growth — or even year-over-year price declines — is going to be necessary to improve affordability and bring more homebuyers into the market,” Sturtevant said.
