Average US long-term mortgage rate falls to 6.23%, ending a three-week climb

Mortgage Rates Dip, Breaking Three-Week Climb as Treasury Yields Retreat

The average rate on 30-year fixed mortgages declined this week, ending a three-week streak of increases, according to data released Wednesday by Freddie Mac. The benchmark home loan rate fell to 6.23% from 6.26% last week, providing modest relief for potential homebuyers in a still-challenging housing market.

The decrease reflects a pullback in long-term U.S. Treasury bond yields, which mortgage rates typically follow. The 10-year Treasury yield, which lenders use as a guide for pricing home loans, dropped to 4.01% by midday Wednesday, down from approximately 4.13% a week earlier.

“The modest decrease in mortgage rates could provide a small window of opportunity for homebuyers who have been waiting on the sidelines,” said Lisa Sturtevant, chief economist at Bright MLS.

Current rates stand significantly lower than a year ago, when the average 30-year fixed mortgage carried a rate of 6.81%. However, they remain elevated compared to pre-pandemic levels, when rates often hovered below 4%.

The 15-year fixed-rate mortgage, popular among homeowners looking to refinance, also experienced a slight decline this week, averaging 5.51%, down from 5.54% last week and well below the 6.10% rate recorded a year ago.

This latest dip in mortgage rates comes amid a series of fluctuations over recent months. Just four weeks ago, the 30-year rate had reached 6.17%, its lowest level in more than a year, before beginning its three-week climb that has now reversed.

The housing market has shown signs of responding to rate decreases. Existing home sales in October increased on an annual basis for the fourth consecutive month, according to recent data. However, the market remains historically subdued, with annual sales hovering around 4 million units since 2023—well below the typical 5.2 million annual pace seen in more balanced markets.

Affordability continues to be a major obstacle for many potential buyers. Years of rapid price appreciation, combined with still-elevated mortgage rates, have pushed homeownership out of reach for many Americans. Economic uncertainty and concerns about job stability have further dampened market activity.

Mortgage rates began their broader downward trend this summer, anticipating the Federal Reserve’s September decision to cut its benchmark interest rate for the first time in a year. The central bank implemented another rate cut in October, though Fed Chair Jerome Powell cautioned that further reductions weren’t guaranteed.

Nevertheless, financial markets appear confident in another Fed rate cut at its December meeting. CME Group data shows traders placing an 83% probability on a December reduction, a sentiment that could influence mortgage rate expectations.

“It is looking increasingly likely that the Fed will cut interest rates when it meets on December 10,” Sturtevant noted. “However, we should not expect that to translate into a big drop in mortgage rates.”

The relationship between Fed policy and mortgage rates isn’t always straightforward. The central bank doesn’t directly control mortgage rates, and previous rate cuts haven’t always resulted in lower borrowing costs for homebuyers. Last fall, after the Fed’s first rate cut in more than four years, mortgage rates actually increased, reaching just over 7% in January 2024 as the 10-year Treasury yield approached 5%.

Looking ahead, industry experts maintain cautious optimism about mortgage rates in 2025. Economists at the National Association of Realtors and First American have forecast the average 30-year mortgage rate to decline to approximately 6% next year, which could provide additional stimulus to the housing market.

For now, the slight decline in rates offers a modest boost to homebuyers’ purchasing power in a market that continues to face significant affordability challenges and limited inventory.