• Average 30-year fixed mortgage rate drops to 7.24%, down from 7.32% last week and 7.40% two weeks ago, per Freddie Mac (FMCC).
  • The decline follows a retreat in 10-year Treasury yields, partly driven by investors shifting from tech stocks to government bonds.
  • Despite the drop, rates remain more than a percentage point above year-ago levels, continuing to weigh on housing affordability and demand.

Modest Relief for Homebuyers

US mortgage rates fell for a second consecutive week, offering modest relief to prospective homebuyers grappling with elevated borrowing costs. The average 30-year fixed mortgage rate dropped to 7.24%, according to Freddie Mac’s weekly survey, down from 7.32% the previous week and 7.40% two weeks ago. The decline comes as the 10-year Treasury yield, a key benchmark for mortgage rates, retreated amid a rotation out of technology stocks into government bonds.

However, the improvement does little to alter the broader affordability picture. Rates are still more than a percentage point higher than a year ago, when the average stood at 6.19%. The persistent gap underscores the challenges facing the housing market, where demand has been subdued by high prices and borrowing costs.

Treasury Yields and Fed Policy

Mortgage rates typically track longer-term Treasury yields, which are influenced by inflation expectations and the outlook for monetary policy. The recent drop in yields was partly attributed to a selloff in AI-related equities that drove investors toward the safety of Treasuries. But that move may be reversing: on October 28, technology shares rebounded and the 10-year yield hovered around 5.04%.

Meanwhile, the Federal Reserve held its benchmark rate steady at 3.75%–4.00% on October 28, with a 10–2 vote. The dissenters favored a quarter-point increase, signaling that policymakers remain divided on the need for further tightening. The Fed’s statement highlighted strong economic activity and resilient spending but also continued elevated inflation, which limits the case for rapid relief in borrowing costs.

Housing Demand Remains Weak

Despite the recent easing, housing demand shows little sign of recovery. Mortgage applications have fallen for seven consecutive weeks, and purchase activity is 18% below the year-earlier pace, according to a recent report from the Mortgage Bankers Association. The data suggests that a small dip in rates is insufficient to revive a market constrained by affordability issues.

Freddie Mac’s own financial results illustrate the paradox: the government-sponsored enterprise reported third-quarter net income of $3.2 billion, up 17% year over year, and net revenues of $6.8 billion, up 19%. Its net worth stands at approximately $81 billion. However, provisions for credit losses increased to $800 million from $175 million a year earlier, partly reflecting higher projected future mortgage rates—a cautionary signal for the housing finance system.

Industry Reaction and Outlook

Industry participants remain cautious. “While the recent decline in rates is welcome, it’s too early to call a turning point,” said a mortgage industry executive who spoke on condition of anonymity. “Affordability remains stretched, and demand is unlikely to pick up meaningfully until rates fall further or incomes rise.”

Economists expect mortgage rates to stay volatile in the near term, sensitive to incoming economic data and shifts in risk sentiment. A sustainable decline would likely require more than two favorable weekly readings, especially with inflation still above the Fed’s 2% target.

Freddie Mac’s survey, released each Thursday, is a benchmark for mortgage rates but may not reflect the exact rate offered to every borrower. The company did not respond to a request for comment on the latest reading.

Clarification: An earlier version of this article misstated the year-over-year change in mortgage rates. It has been corrected.