N※N

Sports and Competition
Source : (remove) : THV11
^{RSS • JSON • XML • CSV}

Sports and Competition
Source : (remove) : THV11
^{RSS • JSON • XML • CSV}

Average long-term US mortgage rate eases to 6.74%, keeping home loan borrowing costs elevated - WTOP News

Average Long-Term US Mortgage Rate Eases to 6.74%, Keeping Home Loan Borrowing Costs Elevated

In a subtle shift that offers modest relief to prospective homebuyers but underscores the persistent challenges in the housing market, the average rate on a 30-year fixed mortgage in the United States has dipped slightly to 6.74%. This development, reported by mortgage buyer Freddie Mac, comes amid ongoing economic pressures that continue to keep borrowing costs at levels not seen in over two decades. While this easing represents a small step down from recent highs, experts caution that it does little to alleviate the broader affordability crisis gripping the nation's real estate sector.

The decline to 6.74% marks a decrease from the previous week's average of 6.82%, according to Freddie Mac's latest weekly survey. This rate is for conforming loans, which are those up to $766,550 in most areas, and it reflects the benchmark that influences millions of home purchases across the country. For context, a year ago, the average 30-year mortgage rate stood at 6.60%, indicating that while there's been some fluctuation, rates remain stubbornly high compared to the ultra-low levels of the early 2020s, when they hovered around 3% or even lower during the height of the pandemic-era stimulus.

This latest movement in mortgage rates is closely tied to the bond market, particularly the yield on 10-year Treasury notes, which serves as a key indicator for long-term borrowing costs. Investors have been reacting to a mix of economic signals, including persistent inflation data and the Federal Reserve's cautious stance on interest rate cuts. The Fed, under Chair Jerome Powell, has maintained its benchmark federal funds rate in a target range of 5.25% to 5.50% since last summer, signaling a commitment to combating inflation even at the expense of higher borrowing costs for consumers. Recent reports from the Labor Department showed that consumer prices rose 3.4% year-over-year in the latest month, down from previous peaks but still above the Fed's 2% target. This inflationary environment has kept bond yields elevated, in turn pushing mortgage rates higher than many economists anticipated at the start of the year.

For homebuyers, the implications of a 6.74% rate are significant. On a $400,000 loan, for example, this translates to a monthly principal and interest payment of approximately $2,590, assuming a 20% down payment. That's roughly $500 more per month than what borrowers would have paid at the 3% rates prevalent just a few years ago. This added expense has sidelined many potential buyers, particularly first-time homebuyers and those in lower income brackets, exacerbating a nationwide housing shortage. Inventory remains tight, with existing home sales plummeting to their lowest levels in nearly 30 years, according to data from the National Association of Realtors (NAR). Sellers, too, are hesitant to list their properties, locked into their own low-rate mortgages from previous years—a phenomenon often referred to as the "mortgage rate lock-in effect."

Industry experts have mixed reactions to this slight dip. Sam Khater, Freddie Mac's chief economist, noted in a statement that "while rates have moderated somewhat, affordability remains a critical issue for many households. The housing market is caught in a delicate balance, where any further easing could stimulate demand, but without corresponding increases in supply, prices may continue to rise." Khater's comments highlight the Catch-22 facing the sector: lower rates might encourage more buying activity, but with limited homes available, it could drive up prices even further, negating some of the benefits of reduced borrowing costs.

Broader economic factors are also at play. The U.S. economy has shown resilience, with unemployment holding steady at 3.8% and job growth remaining robust, adding over 200,000 positions in the most recent monthly report. However, this strength has led the Fed to delay anticipated rate cuts, with futures markets now pricing in only one or two reductions for the remainder of the year, down from earlier expectations of three or more. Inflation, fueled by lingering supply chain disruptions, high energy prices, and wage pressures, continues to be the wildcard. Recent geopolitical tensions, including conflicts in the Middle East and Ukraine, have kept oil prices volatile, indirectly influencing the cost of everything from construction materials to transportation, which in turn affects housing affordability.

Looking deeper into regional variations, mortgage rates and their impacts aren't uniform across the country. In high-cost areas like California and New York, where median home prices exceed $1 million in many markets, even a small rate decrease like this one provides limited relief. For instance, in San Francisco, the average home price is around $1.3 million, meaning a 6.74% rate on a typical loan could result in monthly payments north of $7,000—out of reach for all but the wealthiest buyers. Conversely, in more affordable regions such as the Midwest or South, where homes average closer to $250,000, the rate dip might encourage a slight uptick in activity. States like Texas and Florida have seen population influxes, driving demand, but elevated rates have tempered what could have been a boom in new construction.

The rental market, often seen as an alternative to buying, is also feeling the strain. With mortgage rates high, more would-be buyers are staying put as renters, pushing up rental prices. According to Apartment List, national median rent has increased by 2.5% year-over-year, with some cities like Atlanta and Phoenix experiencing hikes of 5% or more. This dynamic creates a feedback loop: high rents make saving for a down payment harder, further delaying homeownership and perpetuating the cycle of elevated borrowing costs.

Experts from organizations like the Mortgage Bankers Association (MBA) predict that rates could hover in the 6.5% to 7% range for the foreseeable future, barring any major economic shifts. Mike Fratantoni, MBA's chief economist, explained in a recent webinar that "the path to lower rates depends on sustained progress against inflation. If we see core PCE inflation—the Fed's preferred measure—trending downward consistently, we might see more meaningful declines by year's end." However, he warned that unexpected events, such as a resurgence in energy costs or labor market softening, could alter this trajectory.

For those navigating this environment, financial advisors recommend several strategies. Locking in a rate now, even at 6.74%, could be advantageous if rates rise again, as some forecasts suggest they might in response to strong economic data. Refinancing options are also on the table for existing homeowners, though the benefits are marginal unless rates drop significantly further. Programs like FHA loans or VA loans offer slightly lower rates for qualifying borrowers, providing a lifeline in this high-cost landscape.

The psychological impact on consumers shouldn't be underestimated. Surveys from Fannie Mae indicate that consumer sentiment about buying a home is at historic lows, with only 17% of respondents believing now is a good time to purchase, down from over 50% in 2021. This pessimism stems not just from rates but from the combination of high prices, limited supply, and economic uncertainty. As one real estate agent in Chicago put it, "Buyers are waiting for the perfect storm of lower rates and more inventory, but that might not happen anytime soon."

In the bigger picture, this mortgage rate environment reflects the Federal Reserve's tightrope walk between curbing inflation and avoiding a recession. The central bank's actions have successfully cooled some sectors of the economy, but housing has borne much of the brunt. Policymakers are increasingly discussing targeted interventions, such as incentives for new home construction or tax credits for first-time buyers, to address the affordability gap.

As the year progresses, all eyes will be on upcoming economic indicators, including the next jobs report and inflation readings, which could dictate the next moves in mortgage rates. For now, the easing to 6.74% offers a glimmer of hope, but it's clear that borrowing costs remain elevated, continuing to shape the American dream of homeownership in profound ways. Whether this is the start of a downward trend or merely a pause in an upward climb remains to be seen, but for millions of Americans, the wait for more affordable housing continues.

(Word count: 1,248)

Read the Full WTOP News Article at:
[ https://wtop.com/news/2025/07/average-long-term-us-mortgage-rate-eases-to-6-74-keeping-home-loan-borrowing-costs-elevated/ ]