Mortgage Rates: 30-Year Average Drops to 7.24%

The average interest rate on a 30-year fixed mortgage stood at 7.24% this week, a decline from 7.32% the previous week. Freddie Mac released the data on Thursday, noting that this figure represents the lowest level for the benchmark rate in over a month.

One year ago, the same rate averaged 6.17%. The 15-year fixed mortgage rate also decreased, moving from 6.68% to 6.60% this week. A year prior, that rate sat at 5.41%. Lenders typically use the 10-year Treasury yield as a guide for pricing these loans, and that yield has been easing recently after reaching its highest point since 2002.

Mortgage rates began climbing in late February when the United States entered a war with Iran. The conflict pushed up oil prices and increased inflation, while also creating volatility in the bond market. This environment raised yields on U.S. Treasurys. Earlier this month, the 30-year mortgage rate hit 7.4%, its highest level in nearly three years.

As of midday Thursday, the 10-year Treasury yield stood at 4.98%. It had surged past 5.30% earlier in the month, remaining well above the 3.97% level recorded before the war with Iran. The recent drop in mortgage rates follows this peak in the 10-year yield, which had been trending upward since the start of the conflict.

Higher borrowing costs have kept U.S. home sales stagnant this year. The rise in rates since late February has added approximately $350 to the monthly payment for a borrower financing a $400,000 home. This increase limits purchasing power for many potential buyers, causing them to delay purchases.

In late February, the 30-year rate briefly fell to 5.98%, the lowest level since late 2022. The housing market has remained in a slump since 2022, when rates began to rise from pandemic-era lows. Sales of previously occupied homes were essentially flat last year, holding at a 30-year low.

Borrowers may qualify for rates above or below the current average depending on their income and credit. The current decline offers some relief to those facing the pressure of higher borrowing costs on home loans.