The average U.S. mortgage rate fell again this week, continuing a slide that Freddie Mac said eased borrowing costs as the spring homebuying season gets under way. The company reported Thursday that the benchmark 30-year fixed-rate mortgage eased to 6.23%, after declining for a third week in a row from 6.3% last week. Freddie Mac also reported declines in shorter-term mortgage pricing, with the average 15-year fixed-rate mortgage dropping to 5.58%.
Freddie Mac said the benchmark 30-year fixed rate at 6.23% marks the lowest level since March 19, when it was 6.22%. The report also contrasted the current level with a year ago: one year earlier, the average 30-year fixed rate averaged 6.81%. For homeowners considering refinancing, Freddie Mac said the 15-year fixed-rate average also eased, falling to 5.58% from 5.65% last week.
Mortgage rates, Freddie Mac said, are influenced by multiple forces, including the Federal Reserve’s interest-rate decisions and how investors in bond markets expect the economy and inflation to evolve. The report pointed to moves in the U.S. Treasury market as a related signal for lenders as they price home loans.
Freddie Mac linked the most recent easing to a recent softening in the yield on the U.S. 10-year Treasury. It said the 10-year Treasury yield was 4.3% in midday trading Thursday, down slightly from 4.32% a week earlier. Freddie Mac also noted that the 10-year yield was at 3.97% in late February before the war with Iran began to break out in U.S. energy and inflation expectations.
The report said the late-February level is a reminder of how quickly mortgage conditions have shifted. It said that as recently as late February, the average 30-year mortgage rate slipped just under 6% for the first time since late 2022. Freddie Mac attributed the subsequent rise to the war with Iran sending energy prices higher and raising concerns about inflation.
Freddie Mac said bond yields and mortgage rates have been volatile since then, with the conflict dragging on despite efforts by the U.S. and Iran to negotiate a ceasefire. It said those uncertainties, including worries about inflation and the economy, have been weighing on consumer confidence and on the outlook for spring homebuying.
In a separate comment, Lisa Sturtevant, chief economist at Bright MLS, said mortgage rates will likely remain volatile through the spring. “Looking ahead, mortgage rates will likely continue to be volatile throughout the spring,” she said in an email. “For the market to regain full momentum, we will need to see more than just a temporary dip in rates. Rather, we need sustained stability in the global energy market and a clearer sign that domestic inflation is back on a downward trajectory.”
Freddie Mac also framed the rate declines against a broader housing market backdrop that has been under pressure since mortgage rates climbed from pandemic-era lows in 2022. It said sales of previously occupied U.S. homes were essentially flat last year and stuck at a 30-year low, and that the market has remained sluggish so far this year with declines compared with a year earlier in January, February and March.