Average rate on a 30-year mortgage in the US falls to 6.85% this week, first decline in a month

Key Points

• The average rate on a 30-year mortgage fell to 6.85% this week from 6.89%, marking the first decline in a month but remaining near this year’s highs.
• Rates on 15-year fixed-rate mortgages dropped to 5.99% from 6.03% last week and 6.29% a year ago, aiding refinancing but still elevated.
• High mortgage costs have eroded homebuyers’ purchasing power, contributing to a sales slump with pending home sales indices falling further.
• Economists forecast continued volatility, expecting the average 30-year mortgage rate to stay between 6% and 7% through the year.

WASHINGTON (AP) — The average rate on a 30-year mortgage in the U.S. fell this week for the first time in a month, but borrowing costs for homebuyers remain elevated.

The long-term rate dipped to 6.85% from 6.89% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.99%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also came down. The average rate fell to 5.99% from 6.03% last week and 6.29% a year ago, Freddie Mac said.

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.

Bond yields have retreated the past week but broadly have been trending higher since hitting 2025 lows in early April, reflecting investors’ uncertainty over the Trump administration’s ever-changing tariffs policy and worry over exploding federal government debt.

The 10-year Treasury yield was 4.38% in midday trading Thursday, down from 4.54% a week ago.

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%.

High mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have reduced purchasing power for many prospective homebuyers this year. 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. Sales fell last month to the slowest pace for the month of April going back to 2009.

Rising mortgage rates have helped dampen sales during what’s traditionally the peak period of the year for home sales. Mortgage applications fell 3.9% last week from the previous week as home loan borrowing costs rose, according to the Mortgage Bankers Association. Applications for a loan to buy a home are still up 18% from a year earlier.

Recent data suggest sales could slow further in coming months. An index of pending U.S. home sales fell 6.3% in April from March and declined 2.5% from April last year, the National Association of Realtors reported last week.

There’s usually a month or two lag between a contract signing and when the sale is finalized, which makes pending home sales a bellwether for future completed home sales.

Economists expect mortgage rates to remain volatile in 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.