The average interest rate on a 30-year U.S. mortgage recently fell to its lowest point in four months. This policy change is a big departure from the prevailing national housing market landscape. Meaning the realistic average rate right now is a tad under 6.62%. That’s a big decrease from the rate of 6.72% last week, according to Freddie Mac. These drops could offer some incredibly welcome relief to would-be homebuyers who have been battered by high financing costs for an extended period.
After hitting a high of 7.04% in mid-January of this year, long-term mortgage rates have fought against any real downward pull. The recent decline to 6.63% marks an important inflection point. It’s now a little bit below the bottom reached on April 10. In comparison, this time last year the current average 30-year mortgage rate would have been almost a percentage point lower at 6.47%. The 2024 rates are illustrative of a larger trend that starts in 2025. Fortunately or unfortunately, rates have remained high, continuing to bring house market activity to a simmer.
Most significantly, the 30-year mortgage rate has recently fallen significantly. Meanwhile, the typical rate on a 15-year fixed-rate mortgage has dropped too, from that 5.85% down to 5.75% in the last week. A year ago, the 15-year FRM averaged 5.09%. Homeowners are still being funneled into this product as they look to refinance their current home loans. It offers a shorter repayment term and often leads to less interest paid over the life of the loan.
We all know that ongoing, elevated mortgage rates have deeply muted activity in the U.S. housing market. Since early 2022, this market has been going through a recession on the sales side. Since last year, sales in the housing market have declined to their lowest point in almost three decades. Soaring financing costs further dissuaded buyers and exacerbated the crisis. Renters and prospective homebuyers are both facing record affordability challenges. In response, millions are postponing their home purchases or opting to age in place.
According to Freddie Mac’s most recent data, the long-term mortgage rate is currently 6.63%. It’s not all good news—it continues to be a tough financial climate for buyers. Many still have an uphill battle in getting capital to pay for their new digs. The recent decrease in mortgage rates might indicate that the worst is behind us. This adjustment will provide an incentive for some buyers to come back and seize the opportunity.
