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

The average long-term U.S. mortgage rate declined for a third consecutive week, giving some relief to buyers contending with still-high home prices

WASHINGTON (AP) — The average long-term U.S. mortgage rate fell for the third week in a row, providing some relief to prospective homebuyers facing elevated housing costs.

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

Rates on 15-year fixed mortgages, a popular option for borrowers refinancing their home loans, also eased. The average slipped to 6.57% from 6.60% a week earlier. A year ago, it was 5.50%.

Lower mortgage rates can ease some of the strain on would-be buyers dealing with higher borrowing costs.

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

In the weeks before the recent decline, mortgage rates had been climbing since late February, when the U.S. war with Iran began, lifting oil prices and adding to inflationary pressure. The increase also reflected sharp bond-market swings, which pushed up U.S. Treasury yields.

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

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

U.S. home sales have remained sluggish this year largely because high mortgage rates can add hundreds of dollars a month to borrowers’ expenses, reducing buying power and leading many people to delay purchasing a home.

Earlier in the year, the average 30-year mortgage rate briefly fell to 5.98%, its lowest level since late 2022. Since then, the higher rates have 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 either above or below the national average.

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