Home loan costs eased across both major loan categories this week, led by lower yields in the broader bond market. The 10-year Treasury yield, which lenders routinely reference when setting consumer borrowing costs, dropped to 4.84% at midday on Thursday. Financing conditions remain shaped by broader inflationary pressures and Federal Reserve policy. Even with the welcome respite, current borrowing levels continue to run substantially higher than the figures seen twelve months prior.
Key points
Borrowers are experiencing modest cost relief as home financing rates decrease for the th…: Borrowers are experiencing modest cost relief as home financing rates decrease for the third consecutive week.
Loan pricing continues to be directly influenced by Federal Reserve policy, inflation dat…: Loan pricing continues to be directly influenced by Federal Reserve policy, inflation data, and falling bond yields.
Current borrowing expenses remain significantly higher across the market compared to the…: Current borrowing expenses remain significantly higher across the market compared to the financing terms available one year earlier.
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The average 30-year fixed-rate mortgage in the U.S. declined to 7.18% from 7.24% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.22%.
Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also fell again this week. That average rate dipped to 6.57% from 6.60% last week. A year ago, it was at 5.50%.
Lower mortgage rates relieve some of the pressure on prospective homebuyers facing higher borrowing costs on home loans.
Rates on home loans are influenced by inflation, Federal Reserve policy and bond-market investors' expectations for the economy, among other factors. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Thursday at midday, the yield on the 10-year Treasury fell to 4.84%, its lowest level in nearly two months.
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