The average 30-year fixed mortgage rate fell to 6.65% this week, marking the second consecutive week of decline. While this is a slight dip from the previous 6.67%, it remains higher than the 6.58% average recorded at this time last year. Borrowers looking for 15-year fixed-rate loans also saw a minor decrease to 5.95%, though these rates are still significantly above the 5.69% observed a year ago.
Mortgage rates are heavily influenced by the 10-year Treasury yield, which serves as a primary benchmark for lenders. Recent volatility in the bond market has kept borrowing costs elevated for much of the year. Inflation concerns, shifting economic expectations, and the impact of the ongoing conflict in Iran have contributed to bond yields staying higher than they were in February, which in turn keeps pressure on home loans.
In response to these market pressures, the U.S. Treasury Department announced a decision to double its bond buyback program over the coming months. This move aims to stabilize yields, which reached their highest levels in over a year earlier this week. The 10-year Treasury yield dropped to 4.71% following the announcement, providing some relief in the mortgage market.
Despite this recent move toward lower rates, the housing market remains sluggish. High borrowing costs continue to limit purchasing power for many prospective buyers. Home sales have struggled throughout the year, with many potential shoppers opting to delay their plans as they wait for more favorable financing conditions. With rates still higher than previous annual benchmarks, the market continues to grapple with the effects of a long-term shift from pandemic-era lows.