MCLEAN, VIRGINIA — The average U.S. 30-year fixed mortgage rate decreased to 6.48% from 6.53% the previous week, according to a report from Freddie Mac. One year prior, the average 30-year mortgage rate stood at 6.85%.
The 30-year mortgage rate was 6.56% on August 28. Mortgage rates generally follow the trajectory of the 10-year Treasury yield. The yield on the U.S. 10-year Treasury note was 4.47% in midday trading on Thursday, an increase from 4.45% one week prior. This yield was 3.97% in late February before a conflict involving Iran disrupted crude oil tanker routes through the Persian Gulf.
Total mortgage applications decreased by 2.5% last week, marking the third consecutive weekly decline. Purchase mortgage applications decreased by 3% last week, reaching their slowest pace since April. Refinance mortgage applications decreased by 2% last week, and this refinancing pace was the slowest since June of the previous year. However, refinance applications were 20% higher compared to the same week one year prior.
Joel Kan, vice president and deputy chief economist, said: "The prospect of easing energy prices given the evolving situation in the Middle East brought mortgage rates slightly lower last week. The 5-year ARM rate inched up slightly, reflecting a flattening yield curve, as short-term rates are at risk of increasing while longer-term rates have dropped." Mortgage rates are influenced by Federal Reserve interest rate policy decisions and bond market investor expectations for the economy and inflation.
The average 15-year fixed mortgage rate decreased to 5.79% from 5.87% the previous week. One year prior, the average 15-year fixed mortgage rate was 5.99%. Joel Berner, a senior economist at Realtor.com, said: "This conflict is currently the main driver of still-high mortgage rates, as the oil shock ripples inflation fears throughout the global economy."
The average 30-year mortgage rate fell below 6% in late February for the first time since late 2022. The U.S. housing market downturn began in 2022 when mortgage rates started rising from pandemic-era lows. Sales of previously occupied U.S. homes were flat in April following declines in the first quarter compared to the previous year. The median price of U.S. homes listed for sale decreased by 2.4% last month compared to a year earlier, the largest monthly decline recorded since 2017. A separate industry survey indicates that mortgage rates remained flat at the beginning of the week. Government reports on monthly employment are scheduled for release on Friday.