The average rate on a 30-year U.S. mortgage edged lower this week, returning to its lowest level in roughly a year. According to Freddie Mac, the average long-term mortgage rate decreased to 6.3%, down slightly from 6.34% the previous week. A year ago, the rate stood at 6.32%.
The minor decline brings rates back to where they were two weeks ago, following a steady series of drops that reduced borrowing costs to levels not seen since early October 2024.
15-Year Mortgage Rates Also Ease
Rates for 15-year fixed-rate mortgages, a common choice among homeowners seeking to refinance, also fell this week. Freddie Mac reported the average rate declined to 5.53%, down from 5.55% the previous week. A year earlier, the 15-year rate averaged 5.41%.
Treasury Yields Influence Mortgage Rate Movement
U.S. mortgage rates often mirror changes in the 10-year Treasury yield, which serves as a benchmark for pricing home loans. The yield reached 4.13% at midday Thursday, up slightly from 4.09% a week earlier. Despite the recent uptick, the yield remains below its late-summer highs, having briefly dipped to around 4.02% in mid-September.
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Fed’s Policy Direction Remains Key
Mortgage rates have been on a gradual decline since late July, when expectations began building around the Federal Reserve’s first rate cut in a year. The central bank followed through last month amid signs of cooling in the U.S. job market.
However, Fed Chair Jerome Powell has emphasized a cautious approach to future policy adjustments. This contrasts with calls from some committee members—particularly those appointed by former President Donald Trump—who favor more aggressive rate reductions to stimulate growth.
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What Comes Next for Homebuyers
Even if the Fed proceeds with additional rate cuts, U.S. mortgage rates may not necessarily follow suit. As seen last fall, when the Fed initiated its first rate cut in more than four years, mortgage rates actually climbed afterward, peaking at just above 7% by January 2025.
For now, the combination of subdued inflation expectations, moderate economic data, and cautious Fed messaging continues to anchor mortgage rates near their lowest levels in a year, offering a window of opportunity for prospective homebuyers and refinancers.
Sources:
AP News — “Average long-term U.S. mortgage rate eases to 6.3%
