Mortgage rates decline for third week in a row

In the United States, mortgage rates experienced a continued decline as of June 18, 2025. The average rate for a 30-year fixed mortgage dropped to 6.81%, marking its third consecutive weekly reduction. This shift in mortgage rates is significant for potential home buyers, especially as elevated borrowing costs have been a major deterrent in the housing market, which has been facing challenges since 2022. The average mortgage rate had been as high as just above 7% earlier this year, indicating a more favorable environment for borrowing for prospective homebuyers. Freddie Mac, a key mortgage buyer, reported the decrease from the previous week’s rate of 6.84%. A year prior, the average was slightly lower at 6.87%, highlighting a slight improvement over the past year in borrowing conditions. Significant factors that influence mortgage rates include the interest rate policies set by the Federal Reserve, investors' expectations concerning the economy, and prevailing inflation trends. The 10-year Treasury yield, a barometer used by lenders to set mortgage rates, recently fell to 4.35% from 4.58%, which reflects shifting market conditions. Additionally, the 15-year fixed mortgage rates, often favored by homeowners refinancing existing loans, also saw a slight decrease, falling to 5.96% from 5.97% last week, and down from 6.13% a year ago. Even with these declining rates, high borrowing costs continue posing challenges, adding substantial monthly expenses for borrowers and limiting their purchasing power in the market. The sluggish demand for housing has persisted, with sales of previously occupied homes in the U.S. dropping to their lowest levels in almost three decades last year, a trend that has carried into the current year. Recent data shows that the spring homebuying season remained weak, further exacerbated by high mortgage rates. Additionally, the new home market felt the impact of these elevated borrowing costs, illustrated by a decrease in new constructions in the previous month, which fell short of economists’ expectations. The sentiment among homebuilders also took a hit, with key sentiment indicators registering one of the lowest levels since 2012, underscoring a growing concern over the impediments that current mortgage rates and economic uncertainties present for demand in the new housing sector.