The average interest rate on a 30-year mortgage rises to 6.49%, near the lowest level in more than a year
The average interest rate on 30-year mortgages rose slightly this week, remaining near its lowest level in over a year.
The interest rate rose from 6.47 percent in the previous week to 6.49 percent, said mortgage buyer Freddie Mac on Thursday. A year ago, the average interest rate was 7.09 percent.
Borrowing costs for 15-year fixed-rate mortgages, popular with homeowners refinancing their mortgages, also rose this week. The average interest rate rose to 5.66 percent from 5.63 percent the previous week. A year ago, the average was 6.46 percent, according to Freddie Mac.
Despite the modest increase, mortgage rates overall are expected to continue to decline this year as signs of easing inflation and a cooling labor market have raised expectations that the Federal Reserve will cut its benchmark interest rate next month for the first time in four years.
“In 2023, the 30-year fixed mortgage rate reached nearly 8%, which put a big drag on the housing market,” said Sam Khater, chief economist at Freddie Mac. “Currently, the 30-year fixed rate is around 6.5% and will likely decline in the coming months as inflation continues to ease. Lower rates are good news for both prospective buyers and sellers.”
The interest rate on a 30-year mortgage is influenced by several factors, including how the bond market reacts to the central bank’s interest rate decisions. This can affect the trajectory of the 10-year U.S. Treasury yield, which lenders use as a guide for pricing home loans.
After hitting a 23-year high of 7.79 percent in October, the average interest rate on 30-year mortgages has hovered around 7 percent most of this year — more than double what it was three years ago.
Increased mortgage interest rates, which can cost borrowers several hundred dollars more each month, are deterring many home buyers. This means that the slump in the American real estate market is entering its third year.
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