The average long-term US mortgage rate falls to 7.29% in fourth-straight weekly drop

The average long-term U.S. mortgage rate fell for the fourth time in as many weeks, more positive news for prospective homebuyers who have been held back by sharply higher borrowing costs and heightened competition for relatively few homes for sale.

The latest decline brought the average rate on a 30-year mortgage down to 7.29% from 7.44% last week, mortgage buyer Freddie Mac said Wednesday. A year ago, the rate averaged 6.58%.

Despite the recent pullback, the average rate on a 30-year home loan is still sharply higher than just two years ago, when it was around 3%. Higher rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already out of reach for many Americans. They also discourage homeowners who locked in far lower rates two years ago from selling.

“In recent weeks, rates have dropped by half a percent, but potential homebuyers continue to hold out for lower rates and more inventory,” said Sam Khater, Freddie Mac’s chief economist.

Long Islanders have seen mortgage rates slip back toward 7% over the past few weeks, but it hasn't led to greater interest in home loans, said Kevin Dayton, vice president of mortgage lending at CrossCountry Mortgage in Melville. He said a combination of elevated rates and few homes for sale is holding back homebuyers.

"I'm hoping we see an increase in inventory in 2024 for a more balanced market," Dayton said. "I can't wait for the days of the multiple offers and crazy bids — and people getting cold feet because of the crazy bids — I can't wait for those days to be behind us."

The average rate on a 30-year home loan climbed above 6% in September 2022 and has remained above that threshold since. Just four weeks ago, it averaged 7.79% — the highest average on record going back to late 2000. The average rate is now at the lowest level it’s been in nine weeks, when it was 7.19%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loan, also declined this week, with the average rate falling to 6.67% from 6.76% last week. A year ago, it averaged 5.9%, Freddie Mac said.

Rates have been declining in recent weeks along with the 10-year Treasury yield, which lenders use as a guide to pricing loans.

With Jonathan LaMantia