Average US rate on a 30-year mortgage slips to 8-week low after
fifth-straight weekly decline
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[February 21, 2025] By
ALEX VEIGA
The average rate on a 30-year mortgage in the U.S. eased for the fifth
week in a row to its lowest level since late December, a welcome boost
for prospective homebuyers in what's traditionally the busiest time of
the year for home sales.
The average rate fell to 6.85% from 6.87% last week, mortgage buyer
Freddie Mac said Thursday. A year ago, it averaged 6.9%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners
seeking to refinance their home loan to a lower rate, also eased this
week. The average rate fell to 6.04% from 6.09% last week. A year ago,
it averaged 6.29%, Freddie Mac said.
Rising home prices and elevated mortgage rates, which can add hundreds
of dollars a month in costs for borrowers, have kept many prospective
home shoppers on the sidelines, especially first-time buyers who don’t
have equity from an existing home to put toward a new home purchase.
Sales of previously occupied U.S. homes fell last year to their lowest
level in nearly 30 years, extending a national home sales slump that
began in 2022 as mortgage rates began to climb from their pandemic-era
lows.
The average rate on a 30-year mortgage is now at its lowest level since
Dec. 26, when it was also 6.85%. It briefly fell to a 2-year low last
September, but has been mostly hovering around 7% this year.
“This stability continues to bode well for potential buyers and sellers
as we approach the spring homebuying season,” said Sam Khater, Freddie
Mac’s chief economist.
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A for sale sign stands outside a home on the market in the Alamo
Placita neighborhood Tuesday, Aug. 27, 2024, in central Denver. (AP
Photo/David Zalubowski, File)
 The inventory of U.S. homes on the
market climbed last month to its highest level since June 2020,
according to data from Redfin. But mortgage rates and prices remain
an unaffordable combination for many would-be homebuyers.
Despite the recent easing in mortgage rates, home loan applications
fell 5.5% last week from the previous week to the lowest level since
the start of the year, according to the Mortgage Bankers
Association.
“Purchase activity was higher than year-ago levels, but many
prospective homebuyers are waiting for supply and affordability
conditions to improve meaningfully before jumping into the market,”
said Bob Broeksmit, the MBA’s CEO.
Mortgage rates are influenced by several factors, including how the
bond market reacts to the Federal Reserve’s interest rate policy
decisions.
The latest pullback in rates echoes a decline in the 10-year
Treasury yield, which lenders use as a guide for pricing home loans.
The yield was at 4.79% just a few weeks ago, reflecting fears that
inflation may remain stubbornly higher amid a solid U.S. economy and
the potential impact of tariffs and other policies proposed by the
Trump administration.
The 10-year yield was at 4.5% in midday trading Thursday, following
a report showing that more U.S. workers applied for unemployment
benefits last week than economists expected.
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