Average 30-year U.S. mortgage rate drops to 7.18%, marking a third weekly decline

WASHINGTON – The average long-term U.S. mortgage rate eased for a third consecutive week, giving some relief to would-be homebuyers who are still dealing with elevated home prices.

Freddie Mac said the average rate on a 30-year fixed mortgage fell to 7.18% from 7.24% the previous week. A year earlier, the average stood at 6.22%.

The average rate for 15-year fixed mortgages, which are often used by homeowners refinancing their loans, also moved lower. It slipped to 6.57% from 6.60% a week earlier. The same measure was 5.50% a year ago.

Lower borrowing costs can ease some of the strain on buyers facing high monthly payments.

Mortgage rates are shaped by inflation, Federal Reserve policy and bond-market expectations for the economy, among other influences. They typically move in step with the 10-year Treasury yield, which lenders use as a benchmark when pricing home loans.

In recent weeks, mortgage rates had been climbing since late February, when the U.S. war with Iran began, lifting oil prices and pushing inflation higher. Rising volatility in the bond market also contributed to higher Treasury yields.

More recently, the 10-year Treasury yield has mostly drifted lower after reaching its highest level since 2002. That has pulled the average 30-year mortgage rate down from 7.4% early last month, when it was near a nearly three-year high.

The yield was 4.84% at midday on the bond market Thursday, its lowest level since early September. It had climbed above 5.30% in early October and remains far above its 3.97% level before the war with Iran.

U.S. home sales have remained sluggish this year largely because higher mortgage rates can add hundreds of dollars a month to borrowing costs, cutting into buyers’ purchasing power and causing many to delay purchases.

In late February, the average 30-year mortgage rate briefly fell to 5.98%, its lowest point since late 2022. Since then, the rise in rates has added roughly $300 to $350 a month to the cost of financing a $400,000 home loan.

Depending on income, credit history and other factors, borrowers may qualify for a 30-year mortgage rate above or below the national average.

The U.S. housing market has been weak since 2022, when mortgage rates started rising from pandemic-era lows. Sales of previously occupied U.S. homes were essentially unchanged last year and remained at a 30-year low.