Mortgage rates dip slightly for the first time in six weeks, but remain steeper than last year

U.S. mortgage rates experienced a slight decrease for the first time in six weeks, but they are still higher compared to last year, according to Freddie Mac. The average 30-year fixed-rate mortgage rate dropped to 6.67%, a reduction from 6.69% the previous week. This slight drop brings some relief to potential homebuyers, although borrowing costs remain elevated compared to a year ago.

The rate was notably higher at 6.58% at the same point in 2025. Higher mortgage rates lead to increased monthly costs for borrowers, which can limit purchasing power and potentially delay homebuyers' decisions. In July, U.S. sales of previously-occupied homes continued to decline. Similarly, the 15-year fixed-rate mortgage rate also experienced a slight decrease, averaging at 5.96% this week, down from 5.96% the previous week.

However, this rate is still higher than a year ago, when the average was 5.71%. Various factors influence mortgage rates, including inflation, the Federal Reserve's policy rate decisions, and expectations from bond market investors about the economy. These rates generally follow the trajectory of the 10-year Treasury yield, which lenders use as a benchmark for pricing home loans.

The 10-year Treasury yield eased slightly to 4.61% on Thursday, down from 4.72% at the beginning of the week. Both mortgage rates and the bond market have been trending upward this year, driven by the U.S. conflict with Iran, which has heightened inflation expectations due to soaring crude oil prices. Despite recent oil price declines, long-term bond yields remain higher than before the conflict began in late February, contributing to the persistent increase in mortgage rates.