The average US 30-year mortgage rate falls to 7.11% this week, its fourth straight decline

The average long-term U.S. mortgage rate fell for the fourth straight week, offering more relief for prospective home shoppers at a time when many have put off buying a home due to elevated home loan borrowing costs and prices.

The average 30-year fixed-rate mortgage in the U.S. declined to 7.11% from 7.18% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.24%.

The latest pullback brings the average rate to its lowest level since Sept. 24, when it was at 7.03%.

Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also fell again this week. That average rate dipped to 6.45% from 6.57% last week. A year ago, it was at 5.49%.

Rates on home loans are influenced by inflation, Federal Reserve policy and bond-market investors’ expectations for the economy, among other factors. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Until the past few weeks, mortgage rates had been on the rise since late February, when the U.S. war with Iran began, pushing up the price of oil and driving inflation higher. The run-up in rates also reflected heightened bond market volatility, which led to rising yields on U.S. Treasurys.

However, the 10-year Treasury yield has been mostly trending lower since early October, after climbing to its highest level since 2002. That’s caused the average rate on a 30-year mortgage to come back down after reaching 7.4% early last month, its highest level in nearly three years.

The 10-year Treasury yield was at 5.10% at midday on the bond market Thursday. It surged to more than 5.30% in early October, but remains well above its 3.97% level from before the war with Iran.

While rates have eased in recent weeks, the average rate on a 30-year mortgage has stayed above 7% and could remain elevated for some time. Persistently high inflation has raised the odds that the Federal Reserve will raise its key interest rate at its next meeting in December. It kept rates unchanged late last month, after raising them in September.

The central bank doesn’t set mortgage rates, but its decisions to raise or lower its short-term rate are watched closely by bond investors and can ultimately influence rates on home loans.

U.S. home sales have been in a rut this year, mostly due to elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing power and prompting many to put off buying a home. Sales of previously occupied U.S. homes declined last month to their slowest annual pace in more than 16 years as mortgage rates surged.

In late February, the average rate on a 30-year mortgage briefly dipped to 5.98%, its lowest level going back to late 2022. Going by the latest average rate, a home shopper financing a $400,000 home loan is now paying roughly $300 more a month than when the rate was just below 6%.

Depending on a borrower’s income, credit and other factors, they may qualify for a rate on a 30-year mortgage that is below or above the current average.

The U.S. housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes were essentially flat last year, stuck at a 30-year low.