March 28, 2025
The average rate on a 30-year mortgage in the U.S. rose slightly for the second week in a row, a modest setback for prospective home shoppers as the spring homebuying season ramps up.
The rate rose to 6.67% from 6.65% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.87%.
Including this week, the average rate on a 30-year home loan has risen only twice in the past nine weeks, a welcome trend for aspiring homebuyers struggling to afford a home after years of soaring home prices.
“The 30-year fixed-rate mortgage has stayed under 7% for nine consecutive weeks, which is helpful for potential buyers and sellers alike,” said Sam Khater, Freddie Mac’s chief economist.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also rose this week, pushing the average rate to 5.83% from 5.8% last week. A year ago, it averaged 6.21%, Freddie Mac said.
Mortgage rates are influenced by several factors, including bond market investors’ expectations for future inflation, global demand for U.S. Treasurys and the Federal Reserve’s interest rate policy decisions.
After climbing to just above 7% in mid-January, the average rate on a 30-year mortgage has been mostly declining, loosely following the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
The yield, which was nearing 4.8% in mid-January, has mostly fallen since then, reflecting worries about the economy’s growth and the fallout from the Trump administration’s decision to impose tariffs on imported goods from many of the nation’s key trade partners. The yield was at 4.23% in midday trading Thursday.
Tariffs can drive inflation higher, which could translate into higher yields on the 10-year Treasury note, pushing up mortgage rates. That’s because bond investors demand higher returns as long as inflation remains elevated.
The Fed has been holding its key interest rate steady this year, after cutting it sharply through the end of last year. While lower rates can help give the economy a boost, they can also stoke inflation.
On Wednesday, the central bank kept its benchmark interest rate unchanged. It also signaled that it still expects to cut rates twice this year, even as it sees inflation staying stubbornly elevated.
While the Fed doesn’t set mortgage rates, its actions can ultimately influence borrowing costs for mortgages and other consumer loans.
“In the near term, we expect mortgage rates to remain in a fairly narrow range, between 6.5% and 7%, which should support the spring housing market,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association.
The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes fell last year to their lowest level in nearly 30 years. They rose 4.2% last month from January, but were down 1.2% from February last year, the National Association of Realtors said Thursday.
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