Average mortgage rates have inched back below 7%, a key psychological hurdle for some homebuyers frustrated by persistently elevated borrowing costs.
The 30-year, fixed-rate mortgage averaged 6.96%, down from 7.04% last week, mortgage giant Freddie Mac said Thursday. A year ago this week, the 30-year rate averaged 6.69%.
It's the first decline in weekly mortgage rates since the second week of December. The 30-year rate eclipsed the 7% threshold last week for the first time since May.
“While affordability challenges remain, this is welcome news for potential homebuyers, as reflected in a corresponding uptick in purchase applications,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Meanwhile, the 15-year, fixed-rate mortgage averaged 6.16%, down from last week 6.27% but up from 5.96% in January 2024.
Homebuyers hoping for a bigger rate cut will have a long wait, according to analysts who also said current rates are not high compared to historical standards.
The daily rate for a 30-year, fixed-rate mortgage was 7.08%, unchanged from the day before, according to Mortgage News Daily. Daily rates tend to be more volatile than weekly rates.
"Given that rates take cues from bonds and bonds take cues from economic data, it's perhaps no surprise to see an absence of volatility in rates on a week that has very little to offer in terms of economic data," Matthew Graham, chief operating officer of Mortgage News Daily, wrote Wednesday.
Another indicator of mortgage rates is the 10-year Treasury yield that drives longer-term interest rates such as mortgages. It jumped after the election and remains elevated.
The number of mortgage applications held steady from last week, rising 0.1%, according to the Mortgage Bankers Association, or MBA. Mortgage refinancings fell 3% from the previous week.
"Incoming economic data are likely to keep the Federal Reserve on hold for now, while uncertainties about economic policy are likely to keep longer-term rates, including mortgage rates, steady at these levels,” said Mike Fratantoni, MBA's chief economist, in a statement.