US Mortgage Rates See Slight Decrease After Six Weeks of Increases
Borrowing costs remain higher than the previous year, impacting potential homebuyers.
The average interest rate on a 30-year fixed-rate mortgage in the U.S. decreased slightly this week, marking the first such dip in six weeks. The benchmark rate fell to 6.67% from 6.69% last week, according to mortgage buyer Freddie Mac. Despite this marginal relief, the current rate is still higher than the 6.58% average recorded at this time last year.
Higher mortgage rates can significantly increase monthly payments for borrowers, thereby reducing their purchasing power and potentially leading them to postpone home purchases. This trend was observed in July, when sales of previously occupied homes slowed as rates were on the rise.
Rates for 15-year fixed-rate mortgages, often utilized for refinancing, also saw a minor decrease, averaging 5.96% this week compared to 6.01% last week. However, this rate remains above the 5.71% average from the same period in 2025.
The movement of mortgage rates is influenced by various economic factors, including inflation, Federal Reserve policy decisions, and the expectations of bond market investors. These rates generally follow the yield of the 10-year Treasury, a key benchmark for lenders.
The 10-year Treasury yield has also eased recently, falling to 4.61% as of Thursday midday trading, down from 4.72% at the start of the week. This decline in Treasury yields corresponds with a cooling of consumer and wholesale inflation in the U.S. last month. While prices continue to rise, the slower pace may lead the Federal Reserve to maintain current interest rate levels.
Earlier in the year, both mortgage rates and bond yields had been trending upward, partly attributed to the conflict in Iran, which fueled concerns about inflation due to rising crude oil prices. Although oil prices have recently softened, long-term bond yields have not fully reverted to pre-conflict levels, contributing to sustained higher mortgage rates. Before the conflict began in late February, the 10-year Treasury yield stood at 3.97%, with 30-year and 15-year mortgage rates averaging approximately 5.98% and 5.44%, respectively, according to Freddie Mac.