US 30-year mortgage rate falls for a fourth straight week to 7.11%

Existing-home sales hit slowest annual pace in more than 16 years

The average rate on a 30-year fixed U.S. mortgage fell for the fourth straight week, slipping to 7.11% from 7.18%, mortgage buyer Freddie Mac said Thursday. The pullback offered more relief to prospective home shoppers at a time when many have put off buying a home because of elevated borrowing costs and prices.

The latest decline left the 30-year average at its lowest level since Sept. 24, when it stood at 7.03%, according to Freddie Mac. A year ago, the average rate was 6.24%. Federal Reserve Economic Data, the database known as FRED, archives Freddie Mac’s weekly survey and records the 30-year average at 7.11% as of Nov. 12.

Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also fell again this week. That average dipped to 6.45% from 6.57% last week, Freddie Mac said; a year ago, it stood at 5.49%.

Rates on home loans are influenced by inflation, Federal Reserve policy and bond-market investors’ expectations for the economy, among other factors, and they generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Until the past few weeks, mortgage rates had been climbing since late February, when the U.S. war with Iran began, according to the AP report. The report attributed the run-up to the war pushing up the price of oil and driving inflation higher, and to heightened bond-market volatility that led to rising yields on U.S. Treasurys.

The 10-year Treasury yield has mostly trended lower since early October, after climbing to its highest level since 2002. That retreat pulled the 30-year mortgage average back down from 7.4%, the peak it reached early last month and its highest level in nearly three years. The yield stood at 5.10% at midday Thursday on the bond market, the report said, down from a surge above 5.30% in early October but well above its 3.97% level from before the war with Iran. FRED’s daily 10-year yield series recorded 4.88% as of Nov. 12.

Even after four weeks of declines, the 30-year average has stayed above 7% and could remain elevated for some time. Persistently high inflation has raised the odds that the Federal Reserve will raise its key interest rate at its next meeting in December, according to the report. The central bank kept rates unchanged late last month, after raising them in September. The Fed does not set mortgage rates, but its decisions to raise or lower its short-term rate are watched closely by bond investors and can ultimately influence rates on home loans.

U.S. home sales have been in a rut this year, mostly because of elevated mortgage rates, according to the report. Elevated rates can add hundreds of dollars a month to borrowers’ costs, limiting homebuyers’ purchasing power and prompting many to put off buying a home. Sales of previously occupied U.S. homes declined last month to their slowest annual pace in more than 16 years as mortgage rates surged.

The distance from February’s lows is measurable. In late February, the 30-year average briefly dipped to 5.98%, its lowest level going back to late 2022. Going by the latest average rate, a home shopper financing a $400,000 home loan is paying roughly $300 more a month than when the rate was just below 6%, the report said. FRED separately records the median sales price of U.S. houses sold at $393,300 as of Nov. 12. Depending on a borrower’s income, credit and other factors, a borrower may qualify for a 30-year rate below or above the prevailing average.

The housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes were essentially flat last year, stuck at a 30-year low.