McClean, Va. – The average rate on a 30-year U.S. mortgage edged up this week, ending a five-week decline in borrowing costs for homebuyers.
The long-term rate ticked up to 6.72% from 6.67% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.89%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also rose. The average rate increased to 5.86% from 5.80% last week. A year ago, it was 6.17%, Freddie Mac said.
High mortgage rates can add hundreds of dollars a month in costs for borrowers and reduce their purchasing power. That’s helped keep the U.S. housing market in a sales slump that dates back to 2022, when mortgage rates began to climb from the rock-bottom lows they reached during the pandemic.
Last year, sales of previously occupied U.S. homes sank to their lowest level in nearly 30 years. They’ve remained sluggish so far this year, as many prospective homebuyers have been discouraged by elevated mortgage rates and home prices that have continued to climb, albeit more slowly.
Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation.
The key barometer is the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The yield was at 4.37% at midday Thursday, up from 4.34% late Wednesday.
Yields moved up last week as traders bet that a better-than-expected June jobs report could keep the Fed on hold when it comes to interest rates.
The average rate on a 30-year mortgage has remained relatively close to its high so far this year of just above 7%, set in mid-January. The 30-year rate’s low point this year was in early April when it briefly dipped to 6.62%.
As mortgage rates eased in recent weeks, more home shoppers have been encouraged to wade into the market. Mortgage applications jumped 9.4% last week from the previous week, according to the Mortgage Bankers Association.
Economists generally expect mortgage rates to stay relatively stable in the coming months, with forecasts calling for the average rate on a 30-year mortgage to remain in a range between 6% and 7% this year.
“Mortgage rates may come down modestly over the coming months but other economic headwinds –- including the impact of tariffs on the prices of consumer goods, weaker labor market conditions and rising consumer debt –- could be what continue to hold the housing market in the second half of 2025,” said Lisa Sturtevant, chief economist at Bright MLS.
