The average interest rate on a 30-year U.S. mortgage edged slightly higher this week but remained near its lowest level since 2025, according to data released by Freddie Mac, providing limited relief to home buyers amid a still challenging housing market.The average long-term mortgage rate rose to 6.16% this week from 6.15% last week, when it had fallen to its lowest level since Oct. 3, 2024, the AP reported. A year ago, the rate was a much higher 6.93%, Freddie Mac said.The cost to borrow on a 15-year fixed-rate mortgage, which homeowners often prefer to refinance their loans, also rose marginally to 5.46% from 5.44% a week earlier. The rate averaged 6.14% during the same period last year.Mortgage rates are shaped by many factors, including Federal Reserve policy signals, inflation expectations, and bond market fluctuations. They track the 10-year US Treasury yield, which stood at 4.17% around noon on Thursday.Rates have largely stabilized in recent weeks after softening since late October, when the 30-year mortgage rate fell to 6.17%, the lowest level in more than a year. The decline followed expectations of rate cuts by the US Federal Reserve, which began in September and continued last month.Although the Fed does not directly set mortgage rates, its interest rate decisions can influence investor behavior. Rate cuts often signal slower growth or a reduction in inflation, which increases demand for US government bonds and lowers long-term yields, which may result in lower mortgage rates.Overall, the average 30-year mortgage rate decreased by about one percentage point last year compared to the beginning of 2025, helping to improve purchasing power for some buyers by the end of the year. Sales of pre-owned U.S. homes increased month-over-month in September, October and November.However, November sales were down from a year earlier – the first such decline since May – and the market is on track to finish the year below 2024 levels. Current home sales data for December are due next week.Low mortgage rates have provided some relief to buyers who can afford the current prices. The average monthly U.S. housing payment fell to $2,365 in the four weeks ended Jan. 4, according to Redfin, down 4.7% from a year earlier.Despite this, housing affordability remains a major hurdle, especially for first-time buyers, due to rising home prices and modest wage growth over the years. Economic and job market uncertainty has also sidelined many potential buyers.Economists broadly expect the average 30-year mortgage rate to remain slightly above 6% over the course of the year, suggesting borrowing costs are unlikely to fall sharply in the near term.
