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FILE - A "For Sale" sign is displayed outside a home on Friday, July 11, 2025, in Portland, Ore. (AP Photo/Jenny Kane, File)
FILE - A "For Sale" sign is displayed outside a home on Friday, July 11, 2025, in Portland, Ore. (AP Photo/Jenny Kane, File)
US 30-year mortgage rate dips to 6.5% amid housing slump
Summary
- Average 30-year U.S. mortgage rate drops to 6.5%
- Down from 6.56% the previous week, Freddie Mac reports
- Rate was 6.35% a year ago, still higher than pre-2022 levels
- Elevated mortgage rates keep housing market in slump
- Lower rates could improve buyer affordability, but sales lag
The average rate on a 30-year U.S. mortgage fell again this week, extending a recent trend that should give prospective homebuyers more purchasing power.
The long-term rate eased to 6.5% from 6.56% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.35%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell. The average rate slipped to 5.6% from 5.69% last week. A year ago, it was 5.47%, 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.
Rates have been mostly declining since late July amid growing expectations that the Fed will cut its benchmark short-term interest rate at the central bank’s meeting of policymakers later this month.
A similar trend happened last year in the leadup to a year ago, when the Fed cut its rate in for the first time in more than four years. At that time, the average rate on a 30-year mortgage got down to a 2-year low of 6.08%, but then climbed again, reaching above 7% by mid-January.
While the Fed doesn’t set mortgage rates, its actions can influence bond investors’ appetite for long-term U.S. government bonds, like 10-year Treasury notes. Lenders use the yield on 10-year Treasurys as a guide to pricing home loans.
The 10-year Treasury yield was at 4.18% at midday Thursday, down from 4.22% late Wednesday.
In a high-profile speech last month, Federal Reserve Chair Jerome Powell signaled the central bank may cut rates soon even as inflation risks remain elevated because of the Trump administration’s tariffs. That’s because of signs that the job market is slowing.
The government’s August job market snapshot is due out Friday.
Still, while a Fed rate cut could give the job market and overall economy a boost, it could also fuel inflation. That could push bond yields higher, driving mortgage rates upward in turn.
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