After six weeks of climbing, the average rate on a 30-year mortgage in the U.S. has finally edged lower this week. According to mortgage buyer Freddie Mac, the rate slipped to 6.78% from 6.79% last week. While this is a slight decrease, it is still lower than the average rate of 7.4% from a year ago.
For those looking to refinance, borrowing costs on 15-year fixed-rate mortgages have also eased this week. The average rate dropped to 5.99% from 6% last week, compared to 6.76% a year ago.
Various factors influence mortgage rates, including the yield on U.S. 10-year Treasury bonds, which lenders use as a benchmark to price home loans. Recent reports on inflation and the economy have caused bond yields to rise in recent weeks.
Expectations surrounding President-elect Donald Trump’s plans to lower tax rates, increase tariffs, and reduce regulations have also impacted bond yields. This, in turn, could lead to higher U.S. government debt and inflation, as well as faster economic growth.
Despite the recent increase in bond yields, the average rate on a 30-year mortgage is still lower than its peak of 7.22% in May. Economists predict that mortgage rates will remain volatile in 2025, but are likely to hover around 6%.
High mortgage rates and prices have contributed to a sales slump in the U.S. housing market dating back to 2022.
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