Mortgage rates ease while broader market questions remain
The average rate on a 30-year US mortgage has seen a modest decrease for the second consecutive week, now standing at 6.84%. This slight dip, from 6.85% last week, comes as home borrowing costs largely remain at elevated levels. Mortgage buyer Freddie Mac reported the new average Thursday. A year ago, the average rate for a 30-year fixed mortgage was 6.95%.
Mortgage rates are influenced by a complex interplay of factors, including the Federal Reserve’s interest rate policies and investors’ expectations regarding the economy and inflation. A significant indicator in this landscape is the 10-year Treasury yield, which lenders use as a guide for pricing home loans.
That 10-year yield was at 4.38% midday Thursday, a decrease from 4.58% just weeks prior. While bond yields have recently pulled back, they have generally been on an upward trend since hitting 2025 lows in early April. This trend reflects ongoing investor uncertainty surrounding evolving tariff policies and concerns over the escalating federal government debt.
The average rate for a 30-year mortgage has stayed relatively close to its year-to-date high of just over 7%, which was observed in mid-January. The lowest point for the 30-year rate this year was in early April, when it briefly touched 6.62%.
Recent economic data further suggests a potential slowdown in home sales in the upcoming months. The National Association of Realtors (NAR) reported two weeks ago that an index tracking pending US home sales decreased by 6.3% in April from March, and saw a 2.5% decline compared to April of last year. Given that there is typically a one-to-two-month lag between the signing of a contract and the finalization of a sale, pending home sales serve as an early indicator for future completed transactions.
Economists anticipate that mortgage rates will maintain a degree of stability in the near future. Forecasts suggest that the average rate for a 30-year mortgage is likely to hover within a range of 6% to 7% throughout the remainder of 2025.
Meanwhile, borrowing costs for 15-year fixed-rate mortgages, often favored by homeowners looking to refinance, also saw a decline, moving from 5.99% last week to 5.97%. A year ago, the average for this loan type was 6.17%, according to Freddie Mac.
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