Mortgage rates fall for third straight week

The average long-term U.S. mortgage rate fell for the third straight week, offering some relief to prospective homebuyers facing higher home prices.

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.

Mortgage rates had been on the rise since late February, when the U.S. war with Iran began, pushing up the price of oil and driving inflation higher. The run-up in rates also reflected heightened bond market volatility, which led to rising yields on U.S. Treasurys.

However, the 10-year Treasury yield has been mostly easing for the past month after climbing to its highest level since 2002. That’s caused the average rate on a 30-year mortgage to come back down after reaching 7.4% early last month, its highest level in nearly three years.

The yield was at 4.84% at midday on the bond market Thursday, its lowest level since early September. It had surged to more than 5.30% in early October and remains well above its 3.97% level from before the war with Iran.

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