The average rate on a 30-year fixed U.S. mortgage declined this week to its lowest level since mid-May, providing some relief for prospective homebuyers after borrowing costs climbed through much of the spring as geopolitical tensions in the Middle East fueled inflation concerns and pushed bond yields higher.
The benchmark 30-year fixed mortgage rate fell to 6.43% from 6.49% a week earlier, while the average rate stood at 6.67% during the same period last year, according to Freddie Mac. The latest reading marks the lowest average since May 14, when the rate was 6.36%. The decline comes after mortgage rates spent several weeks hovering around the mid-6% range.
Borrowing costs also eased for shorter-term loans. The average rate on a 15-year fixed mortgage, a popular option for homeowners refinancing existing loans, slipped to 5.79% from 5.84% the previous week. One year ago, the average stood at 5.80%, Freddie Mac said in its weekly mortgage survey.
Mortgage rates remain closely tied to movements in the bond market, particularly the benchmark 10-year U.S. Treasury yield, which lenders use as a guide when pricing home loans. The Treasury yield traded around 4.46% Thursday, down slightly from 4.48% the previous day but still well above the 3.97% level recorded in late February before the conflict involving the United States and Iran disrupted global oil markets, The Associated Press reported.
The recent easing in mortgage rates has coincided with lower oil prices following signs that the United States and Iran may eventually reach an agreement to end hostilities and reopen the Strait of Hormuz, a key global shipping route for crude oil. Lower energy prices have reduced some inflation pressure that had driven Treasury yields and mortgage rates higher in recent months, although borrowing costs remain elevated compared with levels seen earlier this year, according to Reuters.
Earlier in 2026, the average 30-year mortgage rate briefly dipped below 6% for the first time since late 2022 before reversing course as geopolitical tensions intensified. Five weeks ago, rates climbed to 6.53%, their highest level since late August, highlighting the volatility that has characterized the housing finance market this year, The Associated Press report said.
Despite this week’s modest decline, the lower borrowing costs have yet to generate a significant rebound in housing activity. Existing-home sales declined during the first quarter compared with a year earlier, extending a housing slowdown that began in 2022 as mortgage rates moved sharply higher from pandemic-era lows. Sales were little changed in April before improving in May to their fastest pace since December, although the pace remained well below historical averages.
Sales of previously owned homes continue to run at roughly 4 million annually, considerably below the long-term historical pace of around 5.2 million homes. Meanwhile, new-home sales also weakened in May as higher financing costs and elevated home prices discouraged buyers, Reuters reported, underscoring the broader affordability challenges facing the market.
Housing economists have also noted that while purchase activity has shown signs of stabilizing, affordability remains the dominant factor shaping buyer decisions. Realtor.com reported that the latest decline represents the biggest weekly drop in mortgage rates in more than two months, but elevated financing costs continue to keep many prospective buyers cautious despite modest improvements in affordability.
