Mortgage rates experienced a small downtick compared to the previous week, even as the stock market has regained its upward momentum and the benchmark U.S. Treasury yield rose.
The average rate on 30-year fixed home loans decreased to 6.65% for the week ending March 27, down from 6.67% the week before, according to Freddie Mac. Rates averaged 6.79% the same week in 2024.
“Recent mortgage rate stability continues to benefit potential buyers this spring, as reflected in the uptick in purchase applications,” says Sam Khater, Freddie Mac’s chief economist.
Realtor.com® Senior Economist Joel Berner says the Freddie Mac rate has been see-sawing in part because the recovering stock market has been pulling investors out of the debt market, as the 10-year Treasury yield—the interest rate the federal government pays to borrow money for a decade—moved higher.
“Uncertainty surrounding the Trump administration’s trade policy is also contributing, as the back-and-forth on tariffs continues to stoke fears about inflation and a potential economic downturn,” adds Berner.
The economist noted that mortgage rates in the high-6% and low-7% range have proven to slow home sales compared to last year, so the fact that the Freddie Mac rate stayed in this range for another week does not bode well for the housing market.
Homebuyers are facing growing prices across the country at the same time that financing their home purchases is more expensive at these elevated mortgage rates, putting the dream of homeownership out of reach for many Americans who simply cannot afford a monthly mortgage payment.
“So far, the first quarter of 2025 has presented more financial challenges to homebuyers than it has opportunities,” says Berner.
But there is some hope on the horizon, with the Realtor.com economists forecasting more home sales this year compared to 2024, and this upwing is expected to start in the coming months as the spring buying and selling season kicks into gear.
How are mortgage rates calculated
Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit. So, when the economy flashes warning signs of rising inflation, treasury yields typically increase, prompting mortgage rates to go up; conversely, when treasury yields decrease mortgage rates fall.
The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account. Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of your down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates; while borrowers perceived as higher risk get higher rates.
Mortgage applications dipped by 2% from a week ago, according to the latest data from the Mortgage Bankers Association’s Weekly Mortgage Application survey ending on March 21.
During the same period, purchase applications, involving the offer and agreement to buy a property, increased 1% from a week ago and 7% year over year, driven by a surge in FHA loan applications, according to Joel Kan, MBA’s vice president and deputy chief economist.
How your credit score impacts your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you’ll receive. The higher the credit score, the lower the interest rate you’ll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a “fair” rating; but people applying for a Federal Housing Administration loan may be able to get approved with a credit score of 500, which is considered a low score.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. They want to make sure you’re able to pay back the loan.
