US mortgage rates dip to near yearly low at 6.27%

The average rate on a 30-year U.S. mortgage declined again this week, easing to just above its lowest level this year.

The average long-term mortgage rate slipped to 6.27% from 6.3% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.44%.

The latest dip brings the average rate to just above 6.26%, where it was four weeks ago after a string of declines brought down home loan borrowing costs to their lowest level since early October 2024.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also eased this week. The average rate dropped to 5.52% from 5.53% last week. A year ago, it was 5.63%, Freddie Mac said.

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. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

The 10-year yield was at 4.02% at midday Thursday, down from around 4.14% the same time last week.

Mortgage rates started declining in July in the lead-up to the Federal Reserve’s decision last month to cut its main interest rate for the first time in a year amid growing concern over the U.S. job market.

At their September policy meeting, Fed officials forecast that the central bank would reduce its rate twice more this year and once in 2026. Still, the Fed could change course if inflation jumps amid the Trump administration’s expanding use of tariffs and the recent trade war escalation with China.

Even if the Fed opts to cut its short-term rate further that doesn’t necessarily mean mortgage rates will keep declining. Last fall, after the Fed cut its rate for the first time in more than four years, mortgage rates marched higher, eventually reaching just above 7% in January this year.

“Looking ahead to the rest of the year, it is difficult to forecast where rates will go, but the likely bet is that they are not going to fall much further,” said Lisa Sturtevant, chief economist at Bright MLS. “Buyers who think they want to wait for lower rates could find themselves facing higher prices but without an improvement in mortgage rates.”

The average rate on a 30-year mortgage has remained above 6% since September 2022, the year mortgage rates began climbing from historic lows. The housing market has been in a slump ever since.

Sales of previously occupied U.S. homes sank last year to their lowest level in nearly 30 years. So far this year, sales are running below where they were at this time in 2024.

Still, many homeowners who bought in recent years after rates climbed above 6% have sought to refinance their home loan to a lower rate as mortgage rates have come down in recent weeks.

Mortgage applications, which include loans to buy a home or refinance an existing mortgage, fell 1.8% last week from a week earlier, according to the Mortgage Bankers Association. But applications for mortgage refinance loans made up 53.6% of all applications, a slight increase from the previous week.

Many prospective homebuyers are also turning to adjustable-rate mortgages. Such loans, which typically offer lower initial interest rates than traditional 30-year, fixed-rate mortgages, accounted for 9.3% of all mortgage applications last week.

Mortgage rates will have to drop below 6% to make refinancing an attractive option to a broader swath of homeowners, however. That’s because about 80% of U.S. homes with a mortgage have a rate below 6% and 53% have a rate below 4%, according to Realtor.com.

Economists generally forecast the average rate on a 30-year mortgage to mostly remain near the mid-6% range this year.