Average rate on a 30-year mortgage falls to lowest level in nearly a year

The average rate on a 30-year U.S. mortgage fell this week to its lowest level in nearly a year, reflecting a pullback in Treasury yields ahead of an expected interest rate cut from the Federal Reserve next week.

The long-term rate eased to 6.35% from 6.5% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.2%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell. The average rate slipped to 5.5% from 5.6% last week. A year ago, it was 5.27%, Freddie Mac said.

Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation.

Rates have been mostly declining since late July amid growing expectations that the Fed will cut its benchmark short-term interest rate at the central bank’s meeting of policymakers next week.

A similar pullback in rates happened in the leadup to September last year, when the Fed cut its rate in for the first time since March 2020 in the early days of the pandemic. Back then, the average rate on a 30-year mortgage got down to a 2-year low of 6.08%, but soon after climbed again, reaching above 7% by mid-January.