Mortgage Costs: 30-Year Rate Falls to 7.24%

The average rate on a 30-year fixed mortgage dropped to 7.24% this week. This figure marks the lowest level recorded in more than a month. Freddie Mac, the government-sponsored mortgage buyer, reported the change on Thursday.

The decline represents a shift from the previous week's average of 7.32%. For context, the rate stood at 6.17% one year ago. Shorter-term loans saw similar movement. The average for 15-year fixed mortgages fell to 6.60%, down from 6.68% last week. That specific rate was 5.41% at this point last year.

Bond market dynamics drive these fluctuations. Mortgage rates generally track the 10-year Treasury yield. Lenders use this specific government bond price to determine the cost of home loans. The 10-year yield stood at 4.98% at midday Thursday. It had surged above 5.30% earlier this month. Before the recent conflict with Iran, the yield hovered near 3.97%.

The U.S. war with Iran, which began in late February, initially pushed mortgage rates higher. Rising oil prices and inflation contributed to the increase. Rates peaked at 7.4% earlier this month. That level represented the highest point in nearly three years. Since then, the 10-year Treasury yield has eased, leading to the current modest drop in mortgage pricing.

Higher borrowing costs have stalled home sales this year. An increase in mortgage rates can add hundreds of dollars to a monthly payment. This change limits purchasing power for prospective buyers. Many households have delayed purchasing decisions as a result. The housing market has remained in a slump since 2022. Sales of previously occupied homes were essentially flat last year. That total stuck at a 30-year low.

In late February, the 30-year rate briefly touched 5.98%. That was the lowest level since late 2022. The rise in rates since that low point has increased monthly costs for a typical borrower. For a $400,000 loan, the monthly payment has gone up by roughly $350. Individual borrowers may qualify for rates above or below the national average based on income and credit.