Mortgage Rates Dip Slightly After 6 Weeks of Increases

The average long-term U.S. mortgage rate fell slightly for the first time in six weeks, mortgage buyer Freddie Mac said Thursday, offering a glimpse of relief for prospective homebuyers even as borrowing costs remain steeper than a year ago.

The benchmark 30-year fixed-rate mortgage dropped to 6.67%, down from 6.69% last week. By comparison, the average rate was 6.58% a year ago.

The 15-year fixed-rate mortgage, often used by homeowners refinancing their loans, also eased slightly, averaging 5.96% this week, down from 6.01% last week. A year ago it stood at 5.71%.

Higher mortgage rates can add hundreds of dollars a month to a borrower's costs, limiting purchasing power and prompting some buyers to delay home shopping. U.S. sales of previously occupied homes slowed again in July.

Mortgage rates are influenced by inflation, Federal Reserve policy decisions and bond market expectations for the economy, and they generally track the 10-year Treasury yield, which lenders use to price home loans.

The 10-year Treasury eased to 4.61% in midday trading Thursday, down from 4.72% at the start of the week. Consumer and wholesale inflation also cooled somewhat last month, though prices continued to climb at a slower pace — a trend that, if it continues, could lead the Federal Reserve to hold off on further rate increases.

Both mortgage rates and the bond market have mostly risen this year amid the U.S. war with Iran, which fueled expectations of hotter inflation as crude oil prices soared. Despite easing oil prices recently, long-term bond yields remain higher than before the conflict began in late February, keeping mortgage rates elevated.

Before the war, the 10-year Treasury stood at 3.97%, while 30-year and 15-year mortgage rates were around 5.98% and 5.44%, respectively, according to Freddie Mac.