Average 30-Year Mortgage Rate Dips Slightly

The average rate on new 30-year fixed-rate mortgage loans dropped slightly for the week ending July 11, bringing modest relief to buyers facing record-high home prices.

Mortgage buyer Freddie Mac said the interest rate fell to 6.89 percent, down from 6.95 percent for the week ending July 3. One year ago, the average rate was 6.96 percent.

In 2024, the average rate has hovered around 7 percent, more than twice the rate from three years ago. Higher rates can add hundreds of dollars to a borrower’s monthly mortgage payments. Many shoppers have delayed purchasing a home due to the added expense, contributing to the third year of the nation’s housing slump.

The 15-year fixed-rate mortgage also fell this week, bringing the average rate to 6.17 percent, down from 6.25 percent for the week ending July 3. This type of mortgage is popular with homeowners who want to refinance their loans. According to Freddie Mac, the rate averaged 6.30 percent a year ago.

Fixed-rate mortgage rates move up or down based on the 10-year Treasury yield. However, several other factors affect the rate, including how the bond market reacts to the Federal Reserve’s interest rate policy.

In late April, the Treasury yield topped 4.7 percent and has generally declined since, on hopes that inflation was slowing enough for the Fed to lower its main interest rate from the highest level in 20 years.

“Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week, and mortgage rates followed suit,” said Sam Khater, chief economist at Freddie Mac, in a statement. “We’re also seeing more inventory on the market, including a fair number of listings with price cuts, which is an encouraging sign for prospective buyers.”

Supply of Inventory

For-sale home inventory supply appeared strong during the first five months of the year.

According to the National Association of Realtors (NAR), the total housing inventory was 1.28 million units at the end of May. This was up by 6.7 percent from April and 18.5 percent year over year.

NAR Chief Economist Laurence Yun expects the increased inventory to help soften record-high home prices in the coming months as buyers have more options.

“Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions,” he said.

While more existing homes are hitting the market, the number of days on the market without a contract has increased, giving buyers more opportunities to negotiate.

Redfin Chief Economist Daryl Fairweather says now is a good time for serious buyers to find a home.

“The combination of declining mortgage rates, rising supply, and a lot of inventory growing stale means buyers have a window where they have more purchasing power than earlier in the year and more homes to choose from,” he said in a statement on Friday.

Mr. Fairweather said it is hard to predict how long home buyers will have a combination of lower mortgage rates with more supply.

“Declining rates should bring many homebuyers back to the market soon, which means competition would tick up, and home prices would increase even faster than they already are,” he said. “It’s also possible rates drop further in 2025, which would make monthly costs decline more and increase competition even more. One thing is for sure: lower rates will lead to more home sales.”

Naveen Athrappully and The Associated Press contributed to this report.