The average interest rate on a 30-year US mortgage edged slightly higher this week but remained close to its lowest level of 2025, offering limited relief to homebuyers amid a still-challenging housing market, according to data released by Freddie Mac.The average long-term mortgage rate rose to 6.16% this week from 6.15% last week, when it had slipped to its lowest level since October 3, 2024, AP reported. A year ago, the rate stood significantly higher at 6.93%, Freddie Mac said.Borrowing costs on 15-year fixed-rate mortgages, often favoured by homeowners refinancing their loans, also moved up marginally to 5.46% from 5.44% a week earlier. The rate averaged 6.14% during the same period last year.Mortgage rates are shaped by a range of factors, including Federal Reserve policy signals, inflation expectations and movements in the bond market. They tend to track the 10-year US Treasury yield, which was at 4.17% around midday on Thursday.Rates have largely stabilised in recent weeks after easing from late October, when the 30-year mortgage rate dipped to 6.17%, then its lowest level in over a year. The decline followed expectations of US Federal Reserve rate cuts, which began in September and continued last month.Although the Fed does not directly set mortgage rates, its interest rate decisions can influence investor behaviour. Rate cuts often signal slowing growth or easing inflation, prompting demand for US government bonds and pushing down long-term yields, which in turn can lower mortgage rates.Overall, the average 30-year mortgage rate ended last year nearly a percentage point lower than at the start of 2025, helping improve purchasing power for some buyers toward the end of the year. Sales of previously owned US homes rose month-on-month in September, October and November.However, November sales were lower than a year earlier — the first such decline since May — and the market is on track to finish the year below 2024 levels. Data on December existing home sales are due next week.Lower mortgage rates have offered some relief to buyers who can afford current prices. The median monthly US housing payment fell to $2,365 in the four weeks ended January 4, down 4.7% from a year earlier, according to Redfin.Despite this, housing affordability remains a major hurdle, especially for first-time buyers, due to years of rising home prices and modest wage growth. Economic and job market uncertainty has also kept many potential buyers on the sidelines.Economists broadly expect the average 30-year mortgage rate to hover slightly above 6% through the year, suggesting borrowing costs are unlikely to fall sharply in the near term.
