Mortgage Rates Drop for Second Consecutive Week

Freddie Mac reported on Thursday that mortgage rates have fallen for the second week in a row. According to their latest Primary Mortgage Market Survey, the average rate for a 30-year fixed mortgage decreased to 6.65%, down slightly from 6.67% last week.

To put this into perspective, the rate was at 6.58% around this time last year.

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Sam Khater, the chief economist at Freddie Mac, noted, “Although the dip in rates offers some relief to homebuyers, it’s crucial for borrowers to shop around to secure the best mortgage rates, potentially saving them thousands.”

The rate for a 15-year fixed mortgage also saw a slight decline, now sitting at 5.95%, down from 5.96% last week.

Mortgage rates are influenced by various factors, including decisions made by the Federal Reserve and global events. It’s worth mentioning that while mortgage rates don’t react directly to the Fed’s interest rate changes, they tend to follow the 10-year Treasury yield closely. As of Thursday afternoon, this yield was around 4.7%.

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Realtor.com’s senior economist Jake Krimmel mentioned, “The current rates should be seen as a baseline, with the possibility of a rise next week due to market fluctuations.” He added that the 30-year Treasury reached a nearly 20-year high recently, prompting interventions from the Treasury Department to buy back significant amounts of debt. Fortunately for homebuyers, most mortgages typically last only seven to ten years before borrowers either refinance or relocate, meaning mortgage rates are generally tied to the 10-year yield, which hasn’t fluctuated as much this week.

Recently, yields on U.S. Treasurys have seen an uptick, attributed to increased government debt, with the federal budget projected to hit approximately $2.1 trillion in deficits for the current fiscal year, according to the nonpartisan Congressional Budget Office (CBO).

Notably, two Treasury auctions held recently garnered attention as yields reached historic highs. The sale of 10-year notes achieved a yield of 4.683%, the highest in nearly two decades, while the 30-year bond auction reached 5.216%, marking a 25-year high.