WASHINGTON (AP) — The average long-term mortgage rate in the United States fell for the second straight week, falling to its lowest level in more than a month.
The benchmark 30-year fixed-rate mortgage fell to 7.24% from 7.32% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the average rate was 6.17%.
Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also fell this week. This average rate fell to 6.60% compared to 6.68% last week. A year ago it was 5.41%.
Lower mortgage rates relieve some of the pressure on potential buyers facing higher borrowing costs for home loans.
Home loan rates are influenced by inflation, Federal Reserve Policy and bond market investors’ expectations for the economy, among other factors. They typically follow the path of the 10-year Treasury yield, which lenders use as a guide in pricing home loans.
Mortgage rates had been rising since late February, when the war between the United States and Iran has begunpushing upwards the price of oil and drive higher inflation. The rise in rates also reflects an increase bond market volatility, which pushed up U.S. Treasury yields.
The 10-year Treasury yield eased broadly this month after hitting its highest level since 2002. That led to a slight decline in the average rate on a 30-year mortgage after hitting 7.4% earlier this month, its highest level in nearly three years.
The yield was at 4.98% at midday on the bond market on Thursday. It jumped to over 5.30% earlier this month and remains well above its pre-war level of 3.97% with Iran.
U.S. home sales holding steady stalled this year largely because of rising mortgage rates, which can add hundreds of dollars a month to costs for borrowers, limiting buyers’ purchasing power and prompting many to postpone home purchases.
In late February, the average rate for a 30-year mortgage briefly dropped to 5.98%, its lowest level dating back to late 2022. The rise in rates since then has added about $350 to the monthly cost for a borrower financing a $400,000 home loan, based on the latest average rate.
Depending on a borrower’s income, credit and other factors, they may qualify for a 30-year mortgage rate that is lower or higher than the current average.
The American real estate market is in a difficult situation slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes remained essentially flat last year, stuck at a 30-year low.
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