Mortgage Rates: 30-Year Average Drops to 7.24% Amid Easing Treasury Yields

The average interest rate on a 30-year fixed mortgage fell to 7.24% this week, marking the lowest level in more than a month. This decline represents the second consecutive weekly drop for the benchmark rate, which had previously hit 7.4% earlier this month. That earlier peak was the highest in nearly three years.

Freddie Mac, a major mortgage buyer, reported the new figures on Thursday. The rate decreased from 7.32% the previous week. For context, the average rate stood at 6.17% exactly one year ago. Borrowers looking at shorter-term options also saw relief, as the 15-year fixed rate fell to 6.60% from 6.68%. A year ago, that 15-year rate was 5.41%.

The movement in mortgage rates tracks closely with the 10-year Treasury yield, which lenders use as a baseline for pricing home loans. The Treasury yield has eased this month after climbing to levels not seen since 2002. On Thursday, the yield sat at 4.98% in midday trading. It had surged past 5.30% earlier in the month, well above its pre-conflict level of 3.97%.

Mortgage costs had been rising since late February, when the U.S. war with Iran began. The conflict pushed up oil prices and drove inflation higher, contributing to the initial spike in borrowing costs. Heightened volatility in the bond market also played a role in pushing up Treasury yields during that period.

Higher rates have stalled home sales in the U.S. this year. Rising borrowing costs limit purchasing power for many buyers, causing them to delay their plans. The housing market has been in a slump since 2022, when rates began climbing from pandemic-era lows. Sales of previously occupied homes were essentially flat last year, stuck at a 30-year low.

The rise in rates since late February has added roughly $350 to the monthly payment for a borrower financing a $400,000 home loan. In late February, the 30-year average rate briefly dipped to 5.98%, its lowest level since late 2022. Individual borrowers may qualify for rates above or below the national average depending on their income, credit history, and other financial factors.