Home loan rates have fallen for the second consecutive week, providing some relief for potential buyers during the traditionally active spring housing period.
Freddie Mac reported Thursday that 30-year fixed mortgage rates decreased to 6.3% from the previous week’s 6.37%. This represents a significant improvement from the 6.83% rate recorded one year ago.
The current rate marks the lowest point since March 19, when it stood at 6.22%.
Homeowners looking to refinance also saw improved conditions, as 15-year fixed mortgage rates fell to 5.65% from 5.74% the previous week. Freddie Mac noted this compares favorably to the 6.03% rate from the same period last year.
Home loan rates fluctuate based on multiple economic factors, including Federal Reserve policy decisions and bond market expectations regarding economic growth and inflation trends.
Earlier this year in late February, 30-year mortgage rates briefly dipped below 6% for the first time since late 2022. However, rates began rising last month when conflict with Iran caused energy costs to spike, raising inflation concerns. This development increased yields on 10-year Treasury bonds, which lenders reference when setting home loan prices.
Thursday’s midday bond trading showed the 10-year Treasury yield at 4.29%, up slightly from 4.28% one week prior. This contrasts with the 3.97% yield recorded in late February, before the Iranian conflict began.
Bond yields started declining last week following a two-week ceasefire agreement between the U.S. and Iran. Pakistan’s military leadership met with Iranian parliamentary officials Thursday as part of ongoing efforts to extend the temporary truce.
The conflict has intensified concerns about inflation and economic direction while consumer confidence in employment markets weakens. Combined with mortgage rate increases over the past seven weeks, these factors have cooled the traditional spring homebuying period.
“The ceasefire announcement earlier this month may have temporarily eased mortgage rates; however, right now, the outlook for the spring market is still unclear,” Lisa Sturtevant, chief economist at Bright MLS, said in an email. “Mortgage rates are probably going to remain volatile as there is still significant uncertainty about a long-term resolution of the conflict with Iran.”
The housing market has struggled since 2022, when mortgage rates started climbing from pandemic-era lows. Previously owned home sales remained virtually unchanged last year, hitting a three-decade low. Sales have continued to lag this year, with January, February, and March all showing declines compared to the same months in the previous year.
