After weeks of stagnation, mortgage rate averages have finally budged and trended downward. But some homebuyers aren’t yet convinced it's the right time to act.
The weekly 30-year, fixed-rate mortgage averaged 6.89% as of Thursday, according to mortgage giant Freddie Mac. That’s the lowest average yet this year and the third consecutive week of declines.
Mortgage rates also fell on a daily basis, to 6.99%, This marks the first time since mid-December the daily rate dipped below the 7% threshold, according to data from Mortgage News Daily.
The 15-year, fixed-rate mortgage had also fallen as of Thursday, averaging 6.05% on a weekly basis, Freddie Mac said. On a daily basis, that rate for a 15-year fixed mortgage was down to 6.37%, lower than the previous day, according to Mortgage News Daily’s measure.
Since the beginning of the year, mortgage rates have been confined to a small range, hovering just above or near the 7% threshold. This week’s decline is a welcome shift from that trend, according to Matthew Graham, chief operating officer at Mortgage News Daily.
“For most prospective borrowers as well as mortgage professionals, the only thing better than sideways stability is a healthy drop to lower levels,” he wrote in a blog post on Wednesday. “Now, after a week of utter flatness, we finally have such a drop.”
That drop was at least in part the result of trading levels in the bond market that saw positive changes this week after data about the economy’s service sector came in weaker than expected.
Borrowers move to refinance
Though the decrease in mortgage rates this week was minimal, it was enough to spur at least a little bit of borrowing activity among homebuyers and owners.
The Mortgage Bankers Association found that although homebuyer purchase applications are on the decline, more borrowers have moved to refinance their rates, taking advantage of the downward shift in mortgage rates.
“Mortgage applications responded to these lower rates and were up for the week overall, driven by a 12 percent increase in refinance applications, which had their strongest week since December 2024,” the group’s deputy chief economist and vice president, Joel Kan, said in a statement Wednesday.
For example, a buyer who may have purchased a home in mid-January when mortgage rates were averaging around 7.04%. To purchase a $400,000 home with a 20% down payment, a 7.04% mortgage comes out to a monthly payment of about $3,037. That’s more than $36,000 per year and close to $1.1 million over the 30-year lifetime of the loan.
But with a 6.89% mortgage rate, that monthly payment falls to just over $3,000. That comes out to 1.08 million over the loan’s lifetime, or $20,000 in savings for the borrower.