The average interest rate for long-term mortgages in the United States has fallen to its most affordable point in more than three years, offering a rare reprieve for homebuyers facing a challenging market. Freddie Mac, a major mortgage buyer, reported Thursday that the average rate on the standard 30-year fixed mortgage edged down to 6.06% this week, dipping from 6.16% the previous week. In contrast, this rate stood at 7.04% a year prior, demonstrating a significant easing over the past twelve months.
The most recent rate retreat matches levels last seen on September 15, 2022, when the 30-year rate was recorded at 6.02%. Alongside this, rates on 15-year fixed mortgages, which are commonly utilized by homeowners refinancing their properties, also saw a decline. The average rate for 15-year fixed loans fell to 5.38% from 5.46% in the prior week, down from 6.27% a year ago, according to Freddie Mac.
This downward trend in mortgage rates enhances purchasing power, which is critically significant for homebuyers amid a steeply depressed housing market. The market has been subdued for several years following sharp price rises and elevated mortgage rates that have priced many potential buyers out. However, economic and employment uncertainties continue to restrain demand, leading many interested buyers to hold back.
Experts note that mortgage rates started trending lower in July, anticipating Federal Reserve interest rate reductions that began in September and have continued into recent months. Though the Federal Reserve does not directly set mortgage rates, cuts to its short-term rate frequently signal expectations of slower economic growth or easing inflation. In response, investors often increase purchases of U.S. Treasury bonds, pushing yields down and creating favorable conditions for reduced long-term mortgage rates.
The repayment burden on homeowners has eased somewhat, reflected in recent data showing median monthly housing payments across the U.S. dropped to $2,413 in the four weeks ending January 11. This figure is a 5.5% decrease from the same time last year and approaches the lowest payments observed in two years.
The recent drop in mortgage interest also follows a federal government announcement that it would purchase $200 billion in mortgage-backed securities in efforts to lower borrowing costs further. This intervention coincided with a marked increase in homeowners refinancing their mortgages last autumn, a pattern that has persisted into the current year. According to the Mortgage Bankers Association, refinancing applications rose by 40% last week from the previous week and now constitute 60% of home loan applications. Meanwhile, loan applications for home purchases increased by 16%.
MBA CEO Bob Broeksmit commented, “With mortgage rates significantly lower than a year ago and approaching 6%, we anticipate strong demand from both homeowners seeking to refinance and potential buyers who had previously been sidelined.”
While economists generally expect mortgage rates to continue declining through this year, most projections suggest the average 30-year mortgage rate will remain above 6%, still substantially higher than levels seen six years ago. For current homeowners with low fixed rates secured during the decade’s historically low rate period, transitioning to a new more expensive mortgage may be unattractive. Realtor.com data indicates that nearly 69% of existing mortgages in the U.S. have fixed rates at or below 5%, and slightly over half enjoy rates of 4% or less, potentially limiting refinancing incentives despite recent rate softening.
Despite the partial relief that lower mortgage rates bring, housing sales remain muted overall. Although reduced rates have contributed to monthly increases in sales of existing homes over the last four months of 2025, the volume remains near a 30-year low, extending a pronounced housing market downturn into its fourth consecutive year.