AP Business Writer, Matt Ott
WASHINGTON (AP) – The average 30-year mortgage rate in the US fell this week for the first time in a month, but home buyers’ borrowing costs continue to rise.
Mortgage buyer Freddie Mac said Thursday that long-term fees fell to 6.85% from 6.89% last week. A year ago, the price averaged 6.99%.
The borrowing costs for 15-year fixed-rate mortgages, which are popular for homeowners to refinance their mortgage, have also decreased. According to Freddie Mac, the average rate fell from 6.03% last week to 5.99%, down from 6.29% a year ago to 6.29%.
Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ economic and inflation expectations. The important barometer is the 10-year Treasury yield. This is used by lenders as a guide to mortgage pricing.
Bond yields retreated last week but have risen sharply since reaching its 2025 low in early April, reflecting investors’ uncertainty over the Trump administration’s ever-changing tariff policy and concerns over exploding federal debt.
The 2010 Treasury yield was 4.38% in noon trading on Thursday, down from 4.54% the week.
The average 30-year mortgage rate remains relatively high so far, slightly above the 7% this year set in mid-January. The low rate for the 30 years this year fell to 6.62% in early April.
The high mortgage fees, which allow borrowers to add hundreds of dollars a month, have reduced the purchasing power of many future home buyers this year. This helped keep the US housing market in a poor sales date back to 2022. This is when mortgage rates began to rise due to the low rock bottom reached during the pandemic.
Last year, sales of previously occupied US homes sank to their lowest levels in nearly 30 years. Last month’s sales fell to the slowest pace in April, dating back to 2009.
The rise in mortgage rates have traditionally helped to reduce sales during the annual peak period of home sales. According to the Mortgage Bankers Association, mortgage applications have fallen 3.9% last week since last week due to rising mortgage borrowing costs. Applications for loans to buy homes have increased by 18% from the previous year.
Recent data suggests sales could drop even further in the coming months. The pending index for home sales in the US fell 6.3% from March to April and 2.5% from last April, the National Association of Realtors reported last week.
There is usually a month or two delay between signing the contract and the sale is completed.
Economists expect mortgage rates to remain volatile in the coming months, hoping to keep the average 30-year mortgage rate in the 6% to 7% range this year.
Original issue: June 5th, 2025, 12:08pm EDT
