Average US rate on a 30-year mortgage falls to 6.89%, third straight weekly decline

The average rate on a 30-year mortgage in the U.S. eased for the third week in a row, a smidgen of relief for prospective home shoppers getting into the market before the busy spring homebuying season starts.

The average rate fell to 6.89% from 6.95% last week, mortgage buyer Freddie Mac said Thursday. A year ago, it averaged 6.64%. 

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also retreated this week. The average rate fell to 6.05% from 6.12% last week. A year ago, it averaged 5.9%, Freddie Mac said.

Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions. The average rate on a 30-year mortgage briefly fell to a 2-year low just above 6% last September, but has been mostly rising since then, echoing a sharp rise in the 10-year Treasury yield, which lenders use as a guide for pricing home loans.

The yield, which was at 3.62% in mid-September, reached 4.79% three weeks ago amid fears inflation may remain stubbornly higher than the Fed’s 2% target.

The 10-year Treasury yield was at 4.43% in midday trading Thursday.

Forecasts mostly call for the average rate on a 30-year mortgage to remain above 6% this year, with some economists including an upper range as high as 6.8%.

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