30-year mortgage rate hits 7.24%, lowest in over a month

The cost of financing a home in the United States has dropped for the second week in a row, offering a temporary reprieve to buyers who have been squeezed by rising interest rates. The average rate on a 30-year fixed mortgage fell to 7.24% this week, down from 7.32% the previous week. This marks the lowest level for the benchmark rate in more than a month.

The decline in long-term rates comes after a period of sharp increases that began in late February. At that time, the average rate for a 30-year loan was 5.98%, its lowest point since late 2022. Since then, borrowing costs have climbed to a peak of 7.4% earlier this month. That peak represented the highest level in nearly three years. The recent drop brings the rate back down, though it remains well above the 6.17% average recorded one year ago.

Shorter-term loans also saw a decrease in pricing. The average rate on a 15-year fixed mortgage, which is often used by homeowners looking to refinance, fell to 6.60% from 6.68% last week. A year earlier, that specific rate stood at 5.41%. Freddie Mac, the government-sponsored enterprise that tracks these figures, released the data on Thursday. The organization serves as a primary source for national mortgage rate averages.

Bond market movements are driving these shifts in mortgage pricing. Lenders typically set home loan rates based on the 10-year Treasury yield. That yield has eased this month after surging to more than 5.30% earlier in the period. It hit those highs following a U.S. military conflict with Iran that began in late February. The war increased oil prices and stoked inflation concerns, which in turn pushed up yields on government debt. As of midday Thursday, the 10-year yield stood at 4.98%. This figure is still far above the 3.97% level seen before the conflict started.

Higher mortgage rates have stalled home sales across the country. Since 2022, when rates began climbing from pandemic-era lows, the housing market has struggled. Sales of previously occupied homes were essentially flat last year, remaining at a 30-year low. The increase in rates since late February has added roughly $350 to the monthly cost of a $400,000 home loan. This added expense limits how much borrowers can afford to pay for a house, causing many to delay their purchase. Individual borrowers may qualify for rates higher or lower than the national average based on their credit and income.

The current environment reflects a mix of economic pressures. Inflation and Federal Reserve policy continue to influence borrowing costs. Bond market investors are adjusting their expectations for the economy, which affects the trajectory of Treasury yields. As long as the 10-year yield remains elevated, mortgage rates are likely to stay higher than they were before the conflict with Iran. The recent dip provides a small break, but the average rate remains high by historical standards.