Freddie Mac reports 30-year mortgage rate falls to 7.24%

Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage declined to 7.24%, down from 7.32% the previous week. This marks the second straight week of decreases and represents the lowest rate recorded in more than a month.

The 15-year fixed-rate mortgage average also dropped to 6.60% from 6.68% last week. Both figures remain significantly higher than a year ago, when the 30-year average stood at 6.17% and the 15-year average at 5.41%.

The decline follows a period of rising costs driven by the U.S. conflict with Iran, which began in late February. The war increased oil prices and inflation, while heightened bond market volatility pushed up U.S. Treasury yields. Lenders use the 10-year Treasury yield as a primary guide for pricing home loans.

The 10-year Treasury yield eased this month after hitting its highest level since 2002. At midday Thursday, the yield stood at 4.98%. This level remains well above the 3.97% rate seen before the war began. Earlier in the month, the yield surged past 5.30%, contributing to the 30-year mortgage rate hitting 7.4%, its highest point in nearly three years.

Higher borrowing costs have stalled U.S. home sales this year. Rising rates add hundreds of dollars to monthly payments, reducing buyer purchasing power and causing many to delay purchases. Since late February, when the 30-year rate briefly touched 5.98%, the increase has added roughly $350 to the monthly cost of a $400,000 loan.

The housing market has faced a slump since 2022, when rates started climbing from pandemic-era lows. Sales of previously occupied homes remained essentially flat last year, stuck at a 30-year low. Individual borrower rates vary based on income, credit, and other factors, but the current average reflects the broader cooling trend in lending costs.

Mortgage buyers often seek 15-year loans when refinancing existing home debt. The current drop in these rates offers a modest relief from the recent upward trend, though costs remain elevated compared to pre-war levels. The Federal Reserve’s policy and inflation expectations continue to influence these fluctuations alongside bond market dynamics.