Mortgage rates in the United States decreased this week, offering some relief to prospective homebuyers. The average 30-year fixed-rate mortgage fell to 6.48% from 6.53% last week, according to Freddie Mac.
The rate remains below 6.85%, the level it reached a year ago. Lower mortgage rates can increase homebuyers’ purchasing power, but recent trends have been affected by global events, including the conflict in the Middle East. Since the start of the war with Iran, mortgage rates have generally trended higher, driven by rising oil prices and inflation concerns, said Joel Berner, a senior economist at Realtor.com.
Mortgage rates are influenced by factors such as the Federal Reserve’s interest rate policies and bond market expectations. They tend to follow the yield on the 10-year U.S. Treasury note, which was at 4.47% midday Thursday, up from 4.45% last week. In late February, the yield was just 3.97% before the conflict escalated.
The average rate on a 30-year mortgage reached its highest since August 28 at 6.56% last week. Despite remaining lower than a year ago, the upward trend and uncertainty about future increases have dampened housing market activity. Existing home sales in April were essentially flat after declining earlier this year, continuing a nationwide housing slump that began in 2022.
Mortgage application volume also declined, with applications falling 2.5% last week for the third consecutive week, according to the Mortgage Bankers Association. While applications for home purchases remain modestly higher than last year, they have slowed to their lowest pace since April. Refinancing activity also softened, though borrowing costs on 15-year fixed-rate loans declined to 5.79% from 5.87%, Freddie Mac reported.
Despite higher mortgage rates, buyers are benefiting from increased property listings and falling home prices. The median price of homes listed for sale decreased by 2.4% in May from a year earlier, the steepest decline since 2017, according to Realtor.com.
Jon Ross Myers is the executive editor and publisher of the Mississippi News Network, Mississippi's largest digital only media company. He can be reached at editor@tippahnews.com
