Current:Home > FinanceAverage rate on a 30-year mortgage falls to 6.20%, its lowest level since February 2023 -WealthSync Hub
Average rate on a 30-year mortgage falls to 6.20%, its lowest level since February 2023
View
Date:2025-04-12 13:38:16
The average rate on a 30-year mortgage in the U.S. fell this week to its lowest level in 19 months, reflecting a pullback in Treasury yields ahead of an expected interest rate cut from the Federal Reserve next week.
The rate fell to 6.20% from 6.35% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.18%.
The average rate is now the lowest it’s been since February 12, 2023, when it was 6.12%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also eased this week. The average rate fell to 5.27% from 5.47% last week. A year ago, it averaged 6.51%, Freddie Mac said.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Fed’s interest rate policy decisions. That can move the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Signs of waning inflation and a cooling job market have raised expectations that the Fed will cut its benchmark interest rate for the first time in four years at its meeting of policymakers next week.
The yield, which topped 4.7% in late April, has pulled back sharply since then in anticipation of a Fed rate cut. It was at 3.68% in midday trading in the bond market Thursday.
“Rates continue to soften due to incoming economic data that is more sedate,” said Sam Khater, Freddie Mac’s chief economist. “But despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages.”
After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has hovered around 7% for most of this year. That’s more than double what it was just three years ago.
The elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have put off many would-be homebuyers, extending the nation’s housing slump into its third year.
Sales of previously occupied U.S. homes are running below last year’s pace, though they ended a four-month slide in July as homebuyers seized on more attractive mortgage rates.
Despite the sales slump, home prices have kept rising, pushing the limits of what homebuyers can afford. The national median home sales price rose in July on an annual basis for the 13th month in a row to $422,600, just shy of the all-time high set in June, according to the National Association of Realtors.
Lower mortgage rates would help boost home shoppers’ purchasing power. But many economists’ forecasts call for the average rate on a 30-year home loan to remain above 6% this year.
“Prospective homebuyers expecting mortgage rates to drop dramatically after the Fed cuts rates will be disappointed,” said Lisa Sturtevant, chief economist at Bright MLS. “The impact of the Fed lowering short-term rates has already been largely baked into mortgage rates, which have been falling since early July. High home prices and a lack of supply continue to be driving affordability challenges in the market.”
veryGood! (1)
Related
- South Korea's acting president moves to reassure allies, calm markets after Yoon impeachment
- US and allies accuse Russia of using North Korean missiles against Ukraine, violating UN sanctions
- Free Popeyes: Chicken chain to give away wings if Ravens, Eagles or Bills win Super Bowl
- Who could replace Pete Carroll? Dan Quinn among six top options for next Seahawks coach
- The city of Chicago is ordered to pay nearly $80M for a police chase that killed a 10
- Calm down, don't panic: Woman buried in deadly Palisades avalanche describes her rescue
- Jonathan Owens Doubles Down on Having “No Clue” Who Simone Biles Was When They Met
- The tribes wanted to promote their history. Removing William Penn’s statue wasn’t a priority
- Grammy nominee Teddy Swims on love, growth and embracing change
- Another layer of misery: Women in Gaza struggle to find menstrual pads, running water
Ranking
- The company planning a successor to Concorde makes its first supersonic test
- Director Bong Joon-ho calls for investigation into 'Parasite' actor Lee Sun-kyun's death
- Plan for Gas Drilling Spree in New York’s Southern Tier Draws Muted Response from Regulators, But Outrage From Green Groups
- Mariska Hargitay reveals in powerful essay she was raped in her 30s, talks 'reckoning'
- 'Kraven the Hunter' spoilers! Let's dig into that twisty ending, supervillain reveal
- Alabama prisoners' bodies returned to families with hearts, other organs missing, lawsuit claims
- Homeowner's mysterious overnight visitor is a mouse that tidies his shed
- Africa’s Catholic hierarchy refuses same-sex blessings, says such unions are contrary to God’s will
Recommendation
Juan Soto praise of Mets' future a tough sight for Yankees, but World Series goal remains
Hundreds of manatees huddle together for warmth at Three Sisters Springs in Florida: Watch
DeSantis and Haley jockey for second without Trump and other takeaways from Iowa GOP debate
Nick Saban retiring as Alabama football coach
Megan Fox's ex Brian Austin Green tells Machine Gun Kelly to 'grow up'
Ranking NFL playoff teams by viability: Who's best positioned to reach Super Bowl 58?
Review: 'True Detective: Night Country' is so good, it might be better than Season 1
These Best Dressed Stars at the Emmys Deserve a Standing Ovation for Their Award-Worthy Style