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Average rate on a 30-year mortgage ticks up to 6.49%, near its lowest level in more than a year

The average rate on a 30-year mortgage edged higher this week, holding close to its lowest level in more than a year.
The rate rose to 6.49% from 6.47% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.09%.
After jumping to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has mostly hovered around 7% this year — more than double what it was just three years ago.
The elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, extending the nation’s housing slump into its third year.
Mortgage rates have been mostly easing in recent weeks as signs of waning inflation and a cooling job 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-rate mortgage nearly hit 8%, slamming the brakes on the housing market,” said Sam Khater, Freddie Mac’s chief economist. “Now, the 30-year fixed-rate hovers around 6.5% and will likely trend down in the coming months as inflation continues to slow. Lower rates are good news for potential buyers and sellers alike.”
The rate on a 30-year mortgage is influenced by several factors, including how the bond market reacts to the central bank’s interest rate policy decisions. That can move the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
The yield, which topped 4.7% in late April, was at 3.93% in afternoon trading in the bond market Thursday, following strong reports on U.S. retail spending and unemployment benefits claims.
Home shoppers and homeowners eager to refinance have been encouraged as mortgage rates have eased back to 14-month lows. Applications for home loans climbed nearly 17% last week, according to the Mortgage Bankers Association. Much of that increase was fueled by a 35% surge in applications by homeowners looking to refinance their existing home loan.
“While the refinances remain strong, we expect that that purchase market will continue to gain momentum as mortgage rates continue to fall,” said MBA CEO Bob Broeksmit.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also ticked up this week, pushing the average rate up to 5.66% from 5.63% last week. A year ago, it averaged 6.46%, Freddie Mac said.
Most economists expect the average rate on a 30-year home loan to remain above 6% this year. That may not be enough for many prospective homebuyers in the face of record-high home prices and a shortage of properties for sale in many markets.
Consider, roughly 86% of all outstanding home mortgages have an interest rate of 6% or below, and more than three quarters have a rate 5% or lower, according to Realtor.com.
That means “rates will need to continue to trend lower to see a fully re-energized housing market,” said Hannah Jones, senior economics research analyst at Realtor.com.
Still, if rates ease further and the supply of homes on the market keeps rising, that could set the stage for improved sales in coming months.
“The summer is typically the busiest time of year in housing, but this fall may see an extra boost from shifting housing conditions,” Jones said.

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