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.
