Average rate on a 30-year mortgage falls again, dips to lowest level since early October

The average rate on a 30-year U.S. mortgage fell again this week, echoing a decline in long-term U.S. Treasury bond yields ahead of the Federal Reserve’s first rate cut this year.

The rate eased to 6.26% from 6.35% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.09%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell. The average rate slipped to 5.41% from 5.5% last week. A year ago, it was 5.15%, Freddie Mac said.

Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation.

Rates generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The yield was at 4.12% in midday trading Thursday, up from 4.06% late Wednesday.

Mortgage rates have been mostly declining since late July amid expectations that Fed would cut rates for the first time since last year. As expected, the central bank delivered a quarter-point cut Wednesday and projected it would lower its benchmark rate twice more this year, reflecting growing concern over the U.S. job market.

The average rate on a 30-year mortgage is now at its lowest level since Oct. 3, when it was 6.12%.

The late-summer slide in mortgage rates has been a welcome trend for the housing market, which has been in a slump since 2022, when mortgage rates began climbing from historic lows. Sales of previously occupied U.S. homes sank last year to their lowest level in nearly 30 years and have remained sluggish so far this year as the average rate on a 30-year mortgage has mostly hovered above 6.5%.