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- Mortgage rates fall to their lowest level in 2025 (cbsnews.com)
Mortgage Rates Hit 2025 Low, Offering Hope to Homebuyers
Good news for those dreaming of homeownership! The average rate on a 30-year U.S. mortgage has dipped to its lowest point of 2025 this week, providing a welcome boost for prospective buyers navigating the housing market.
Freddie Mac, a key player in the mortgage industry, reported Wednesday that the average long-term mortgage rate fell to 6.15%, a slight but significant drop from last week’s 6.18%. This marks the lowest average long-term rate recorded since October 3, 2024, when it briefly touched 6.12% before climbing higher. For perspective, this time last year, the rate stood at a higher 6.91%.
Homeowners looking to refinance also saw a break, with borrowing costs on 15-year fixed-rate mortgages falling to 5.44% this week, down from 5.5% in the prior week. A year ago, these rates averaged 6.13%, according to Freddie Mac.
Mortgage rates are influenced by a complex interplay of factors, including the Federal Reserve’s interest rate decisions and the bond market’s economic and inflation outlook. Generally, these rates tend to mirror the trajectory of the 10-year Treasury yield, which lenders use as a benchmark for pricing home loans. As of midday Wednesday, the 10-year yield registered 4.14%, a fractional decrease from last week’s 4.15%.
The recent easing of mortgage rates began in July, fueled by expectations of a series of Fed rate cuts. These cuts commenced in September and have continued into this month.
While the Fed doesn’t directly set mortgage rates, its actions on short-term rates can signal a future of lower inflation or slower economic growth. This can, in turn, encourage investors to purchase U.S. government bonds, which can help reduce yields on long-term U.S.
Treasurys and ultimately lead to lower mortgage rates. However, it’s worth noting that Fed rate cuts don’t always directly translate into a corresponding drop in mortgage rates.
For those in a position to pay cash or secure financing at current rates, the market is looking more favorable than a year ago. Data from Realtor.com indicates a sharp increase in home listings compared to 2024, and many sellers are now adjusting their initial asking prices as homes spend more time on the market.
Affordability Remains a Hurdle for Many
Despite the recent rate improvements, affordability continues to be a significant challenge, particularly for first-time homebuyers who lack existing home equity to leverage for a new purchase. Economic uncertainties and job market concerns are also prompting many potential buyers to remain on the sidelines.
November saw an increase in sales of previously occupied U.S. homes compared to the prior month. However, sales slowed when compared to the same period last year, marking the first such decline since May, even with average long-term mortgage rates hovering near their yearly low. Year-to-date, home sales for the first 11 months are down 0.5% compared to the same period last year.
Looking ahead, economists generally predict that the average rate on a 30-year mortgage will likely stay slightly above 6% throughout the coming year.
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- Mortgage rates fall to their lowest level in 2025 (cbsnews.com)