The average rate on a 30-year mortgage in the U.S. eased for the third week in a row, a smidgen of relief for prospective home shoppers getting into the market before the busy spring homebuying season starts.<\/p>\n\n\n\n
The average rate fell to 6.89% from 6.95% last week, mortgage buyer Freddie Mac said Thursday. A year ago, it averaged 6.64%.<\/p>\n\n\n\n
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also retreated this week. The average rate fell to 6.05% from 6.12% last week. A year ago, it averaged 5.9%, Freddie Mac said.<\/p>\n\n\n\n
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve\u2019s interest rate policy decisions. The average rate on a 30-year mortgage briefly fell to a 2-year low just above 6% last September, but has been mostly rising since then, echoing a sharp rise in the 10-year Treasury yield, which lenders use as a guide for pricing home loans.<\/p>\n\n\n\n
The yield, which was at 3.62% in mid-September, reached 4.79% three weeks ago amid fears inflation may remain stubbornly higher than the Fed\u2019s 2% target. A solid U.S. economy and worries about tariffs and other policies potentially coming from President Donald Trump have also helped push bond yields higher.<\/p>\n\n\n\n
The 10-year Treasury yield was at 4.43% in midday trading Thursday.<\/p>\n\n\n\n
Elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, prolonging a national home sales slump that began in 2022.<\/p>\n\n\n\n
While sales of previously occupied U.S. homes rose in December for the third month in a row, 2024 was the worst year for home sales in nearly 30 years<\/a>, worse than 2023, which had been the worst in decades.<\/p>\n\n\n\n New data on pending home sales points to potentially further declines in coming months. The National Association of Realtor\u2019s pending home sales index fell 5.5% in December from the previous month, ending a four-month streak of increases.<\/p>\n\n\n\n A lag of a month or two usually exists between when a contract is signed and when the home sale is finalized, which makes pending home sales a bellwether for future completed home sales.<\/p>\n\n\n\n For those hoping that mortgage rates will retreat significantly, economists say that\u2019s unlikely.<\/p>\n\n\n\n Forecasts mostly call for the average rate on a 30-year mortgage to remain above 6% this year, with some economists including an upper range as high as 6.8%.<\/p>\n\n\n\n The Federal Reserve left its benchmark interest rate unchanged<\/a> last week after cutting it three times in a row to close 2024, a sign of a more cautious approach as the Fed seeks to gauge where inflation is headed and what policies the Trump administration will pursue.<\/p>\n\n\n\n