Mortgage rates dipped again on Thursday, marking the second consecutive week of modest declines, but they continued lingering in the elevated upper-6% range against the backdrop of economic uncertainty.
The average rate on 30-year fixed home loans edged down to 6.76% for the week ending May 1, retreating from 6.81% the previous week, according to Freddie Mac. Rates averaged 7.22% the same week in 2024.
“Mortgage rates again declined this week,” says Sam Khater, Freddie Mac’s chief economist. “In recent weeks, rates for the 30-year fixed-rate mortgage have fallen even lower than the first quarter average of 6.83%.”
No Clear Trend Yet, Experts Say
The latest decline in the Freddie Mac rate is a positive sign, but Realtor.com® senior economist Jake Krimmel says it’s too early to celebrate.
“With such small moves, the broader trend is best described as sideways,” notes Krimmel.
Rates today are higher than in early April, when they hovered around 6.64%, but are down about 16 basis points over the past 12 weeks and nearly 40 basis points from a year ago—the largest year-over-year drop since November 2024.
Additionally, this week, 10-year Treasury yields—a key benchmark for long-term borrowing—fell to levels not seen since before President Donald Trump’s “Liberation Day” tariff announcement, reflecting a slight easing in market volatility.
A Cooling Housing Market
Housing market activity, however, appears mixed, with new listings increasing in April compared with a year ago, but the overall momentum is cooling amid elevated rates.
At the same time, homes are sitting on the market longer and active inventory is rising—signs of a market that is adjusting to decreased buyer demand.
How Mortgage Rates Are Calculated
Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations.
Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.
So when the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to go up. Conversely, when Treasury yields decrease, mortgage rates fall.
The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account. Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk.
Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.
Mortgage Applications See Slight Dip
Mortgage applications dipped by 2% from a week ago, according to the latest data from the Mortgage Bankers Association’s Weekly Mortgage Application survey ending on March 21.
During the same period, purchase applications—involving the offer and agreement to buy a property—increased 1% from a week ago and 7% year over year, driven by a surge in FHA loan applications, according to Joel Kan, MBA’s vice president and deputy chief economist.
Your Credit Score’s Role in Mortgage Approval
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you’ll receive.
The higher the credit score, the lower the interest rate you’ll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a “fair” rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. They want to make sure you’re able to pay back the loan.
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