Average U.S. 30-Year Mortgage Rate Drops to 7.18% in Third Consecutive Weekly Decline

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

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

Rates on 15-year fixed mortgages, which are often used by borrowers refinancing their homes, also moved lower. That average slipped to 6.57% from 6.60% a week earlier. It was 5.50% a year ago.

Lower mortgage rates take some pressure off prospective buyers who are facing steeper borrowing costs.

Home loan rates are shaped by inflation, Federal Reserve policy and bond investors’ expectations for the economy, among other factors. They generally move in step with the 10-year Treasury yield, which lenders often use as a benchmark for pricing mortgages.

In the weeks before this recent pullback, mortgage rates had been climbing since late February, when the U.S. war with Iran began, pushing oil prices higher and adding to inflation. The increase also reflected greater volatility in the bond market, which lifted U.S. Treasury yields.

Over the past month, however, the 10-year Treasury yield has mostly drifted lower after reaching its highest level since 2002. That helped pull the average 30-year mortgage rate down after it hit 7.4% early last month, its highest point in nearly three years.

The yield was 4.84% at midday on the bond market Thursday, its lowest reading since early September. It had climbed to 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 elevated mortgage rates can add hundreds of dollars a month to borrowing costs, reducing buyers’ purchasing power and causing many to delay purchasing a home.

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

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

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