Mortgage Rates Fall to 7.24% After Two-Week Slide

The average cost of a 30-year fixed-rate mortgage in the United States fell to 7.24% this week, marking a decrease for the second consecutive week. Freddie Mac, the government-sponsored mortgage buyer, reported the figure on Thursday. This level represents the lowest average rate seen in more than a month. A year ago, the same benchmark stood at 6.17%.

Borrowing costs for 15-year fixed loans also declined. The average for these products, which are frequently used for refinancing existing home loans, dropped to 6.60% from 6.68% the previous week. The 15-year rate was 5.41% at this time last year. The downward trend in mortgage pricing generally mirrors the movement of the 10-year Treasury yield, which lenders use as a primary guide for setting home loan prices.

The recent drop in rates follows a period of sharp increases that began in late February. The start of the U.S. war with Iran at that time drove up oil prices and increased inflation pressures. This sequence of events caused bond market volatility to rise, pushing yields on U.S. Treasurys higher. Consequently, mortgage rates climbed to 7.4% earlier this month, a peak not reached in nearly three years.

The 10-year Treasury yield has eased this month after hitting its highest level since 2002. At midday on Thursday, the yield stood at 4.98%. It had surged past 5.30% earlier in the month. Before the war with Iran began, the yield was 3.97%. The current levels remain well above that pre-war baseline, keeping borrowing costs elevated compared to recent historical standards.

High mortgage rates have kept U.S. home sales stalled throughout the year. The increase in costs limits purchasing power for buyers, often leading to delayed purchases. Since late February, when the 30-year rate briefly hit 5.98%, the rise in interest rates has added approximately $350 to the monthly payment for a borrower financing a $400,000 home loan. The U.S. housing market has remained in a slump since 2022, with sales of previously occupied homes stuck at a 30-year low last year.