A ''For Sale'' sign is outside a residential home in Los Angeles, California, on May 3, 2026. (Photo by Michael Yanow/NurPhoto via Getty Images)
The average long-term U.S. mortgage rate declined this week from its highest level in nine months, providing welcome relief for prospective homebuyers.
The benchmark 30-year fixed rate mortgage rate fell to 6.48% from 6.53% last week, mortgage buyer Freddie Mac said Thursday. The average rate remains below 6.85%, where it was a year ago.
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Why you should care:
When mortgage rates decline they give homebuyers more purchasing power.
Rates have been mostly trending higher since the war with Iran began, disrupting the passage of tankers ferrying crude oil from the Persian Gulf to customers worldwide. That’s sent oil prices sharply higher — a key driver of inflation.
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What they're saying:
"This conflict is currently the main driver of still-high mortgage rates, as the oil shock ripples inflation fears throughout the global economy," said Joel Berner, a senior economist at Realtor.com.
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Big picture view:
Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Expectations of higher oil prices as the war drags on have kept long-term bond yields elevated, causing mortgage rates to mostly trend higher.
By the numbers:
The yield on the U.S. 10-year Treasury note was at 4.47% in midday trading Thursday on the bond market, up from 4.45% a week ago. It was just 3.97% in late February, before the war broke out.
As recently as late February, the average rate on a 30-year mortgage had slipped just under 6% for the first time since late 2022. It’s hasn’t fallen below that threshold since. Last week, it surged to its highest level since August 28, when it was 6.56%.
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While average long-term mortgage rates remain lower than they were at this time last year, their mostly upward trajectory and uncertainty over how much higher they may go as bond markets react to the economic fallout from the conflict in the Middle East have been a drag on the housing market.
Sales of previously occupied U.S. homes were essentially flat in April after declining from a year earlier in the first three months of the year, extending a nationwide housing slump that dates back to 2022 when mortgage rates began to climb from pandemic-era lows. The May existing home sales snapshot is due out next week.
Recent mortgage applications data are another sign that the upward trend in mortgage rates has many would-be homebuyers on hold.
Mortgage applications, which include loans to buy a home or refinance an existing mortgage, fell 2.5% last week for the third week in a row, according to the Mortgage Bankers Association. Applications for loans to buy a home remain modestly higher than last year's levels, but posted their slowest weekly pace since April.
Meanwhile, home loan refinancing applications softened as many homeowners eager to refinance hold out for lower rates.
Still, those homeowners also got some relief this week. Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also eased. That average rate fell to 5.79% from 5.87% last week. A year ago, it was at 5.99%, Freddie Mac said.
Home shoppers who are undeterred by elevated mortgage rates are benefiting from buyer-friendly trends in many markets, including more properties for sale than a year ago and data showing that home listing prices have started falling.
The median price of U.S. homes listed for sale fell 2.4% last month from a year earlier, the steepest decline on data going back to 2017, according to Realtor.com.
The Source: The Associated Press contributed to this report. The story is based primarily on mortgage rate data released by Freddie Mac, which reported weekly changes in average rates for 30-year and 15-year fixed mortgages. This story was reported from Los Angeles.