US 30-Year Mortgage Rate Declines to 6.64%, Offering Hope to Homebuyers

The average interest rate for a 30-year mortgage in the United States has decreased for the second consecutive week, providing a potential boost for homebuyers during the busy spring real estate season. According to Freddie Mac, the rate has dropped to 6.64%, down slightly from 6.65% the previous week. This marks a notable decline from an average of 6.82% recorded a year ago.

Since peaking above 7% in mid-January, mortgage rates have generally trended downward. A decrease in mortgage rates can enhance homebuyers' purchasing power, making it easier for them to enter the housing market. Additionally, the average rate for 15-year fixed-rate mortgages, commonly used by those refinancing their homes, also fell this week to 5.82%, down from 5.89% last week, and down from 6.06% a year prior.

Several factors influence mortgage rates, including investor expectations regarding future inflation, global demand for U.S. Treasury securities, and the monetary policy decisions made by the Federal Reserve. The decline in the average 30-year mortgage rate appears to correlate with movements in the yield of the 10-year Treasury bond, a key benchmark for pricing home loans. After approaching 4.8% in mid-January, the yield has generally decreased in response to signs of an economic slowdown and concerns that tariffs imposed by the previous administration could negatively impact economic growth and trigger inflation.

On Thursday, the yield fell to 4.06% following a significant sell-off in the stock market, driven by the government's latest round of tariffs. This development has led bond investors to speculate that the Federal Reserve may need to lower its main interest rate if economic conditions worsen. Joel Berner, a senior economist, noted that the ongoing decline in the 10-year Treasury yield could lead to further reductions in mortgage rates in the coming months, potentially impacting the housing market throughout the year.

Current projections from housing economists suggest that the average 30-year mortgage rate may stabilize around 6.5% for the remainder of the year. Lower mortgage rates generally encourage home sales by making homeownership more affordable; however, many potential buyers may still hesitate due to job security concerns or fluctuations in their investment portfolios during an economic downturn.

While easing mortgage rates could stimulate buyer activity in 2025, the overarching economic climate will likely play a significant role in shaping consumer behavior. The U.S. housing market has faced challenges since the beginning of 2022, when mortgage rates began to rise from the historic lows seen during the pandemic. Last year, sales of previously owned homes fell to their lowest level in nearly three decades. Although declining mortgage rates and an increase in available properties contributed to a rise in sales in February compared to the previous month, year-over-year sales figures remained down.

Despite the recent easing of mortgage rates, rising home prices continue to drive up ownership costs. The typical monthly payment for U.S. homebuyers reached an all-time high of $2,802 during the four weeks ending March 20, according to Redfin.