Real Estate News
“Economic and monetary policy uncertainty and inflationary concerns will likely keep mortgage rates elevated for the near future.”
The average rate on a 30-year mortgage in the United States eased this week to just below 7 percent, its first decline after climbing five weeks in a row.
The rate fell to 6.96 percent from 7.04 percent last week, mortgage buyer Freddie Mac said Thursday. A year ago, it averaged 6.69 percent. Five years ago, it was 3.6 percent, according to the Federal Reserve Bank of St. Louis.
Here’s what the change can mean for mortgage payments. These calculations are based on a 30-year fixed mortgage on a $500,000 loan with no down payment:
| DATE | MORTGAGE RATE |
MONTHLY PAYMENT |
INTEREST OVER LIFE OF 30-YEAR LOAN |
|---|---|---|---|
| 1/23/2020 | 3.6% | $2,273.23 | $318,361.63 |
| 1/23/2025 | 6.69% | $3,223.07 | $660,306.63 |
| 1/16/2025 | 7.04% | $3,339.96 | $702,383.88 |
Calculations do not include taxes or insurance
Many would-be home buyers have been priced out of the market as mortgage rates and prices have risen in recent years. The median US monthly housing payment climbed to $2,686 in the four weeks that ended Jan. 19, according to an analysis by Redfin. That’s the highest it’s been in nearly seven months.
Elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, prolonging a national home sales slump that began in 2022.
While sales of previously occupied US homes rose in November for the second straight month, the housing market was on track to end 2024 as its worst year for sales since 1995. Full-year home sales data are due out Friday.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their loan to a lower rate, also eased this week. The average rate dropped to 6.16 percent, from 6.27 percent last week. A year ago, it averaged 5.96 percent, Freddie Mac said. Five years ago, it was 3.06 percent, according to the Federal Reserve Bank.
“While affordability challenges remain, this is welcome news for potential home buyers, as reflected in a corresponding uptick in purchase applications,” said Sam Khater, Freddie Mac’s chief economist.
Mortgage applications edged up last week, but have been subdued in recent weeks as the average rate on a 30-year home loan hovered around 7 percent, according to the Mortgage Bankers Association.
This week’s decline in the cost of home loans reflects a pullback in the bond yields that lenders use as a guide to price mortgages, specifically the yield on the US 10-year Treasury. The yield, which was at 3.62 percent in mid-September, climbed to 4.78 percent early last week following strong reports on the US economy and worries that tariffs and other proposed policies by the Trump administration could boost inflation along with economic growth.
The 10-year Treasury yield was at 4.64 percent in midday trading Thursday.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions. Home loan rates have been mostly rising since the Fed signaled last month that it expected to lower its benchmark interest rate just twice this year, down from the four cuts it forecast in September. The central bank’s policymakers are due to meet again next week.
Forecasting the trajectory of mortgage rates is difficult, given that rates are influenced by many factors, from government spending and the economy, to geopolitical tensions and stock and bond market gyrations.
Several economists’ forecasts call for the average rate on a 30-year mortgage to remain above 6 percent this year, with some including an upper range as high as 6.8 percent.
“Economic and monetary policy uncertainty and inflationary concerns will likely keep mortgage rates elevated for the near future,” said Bob Broeksmit, CEO of the Mortgage Bankers Association.
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