Mortgage Rates Dip for First Time in Six Weeks

The average long-term U.S. mortgage rate fell slightly for the first time in six weeks on Thursday, offering a glimpse of relief for prospective homebuyers—though borrowing costs remain steeper than they were a year ago. According to AP News, the benchmark 30-year fixed-rate mortgage dropped to 6.67%, down from 6.69% the previous week, as reported by Freddie Mac’s Primary Mortgage Market Survey. By comparison, the average rate was 6.58% at this time in 2025.

A Small Reprieve in a Strained Market

The modest decline breaks a five-week streak of consecutive increases that had pushed rates to their highest levels in over a year. Borrowing costs on 15-year fixed-rate mortgages also eased slightly, averaging 5.96% this week, down from 6.01% last week—though still above the 5.71% recorded a year ago.

The dip was driven by a combination of cooling inflation and weaker-than-expected jobs data. Consumer prices rose 3.4% in July from a year ago, down slightly from 3.5% in June, according to the Labor Department. Meanwhile, the U.S. economy lost 23,000 jobs in July, far short of the 80,000 gain economists had expected, as Yahoo Finance reported.

The 10-year Treasury yield, which lenders use as a guide for pricing home loans, fell to 4.61% as of midday Thursday, down from 4.72% at the start of the week.

Housing Market Under Pressure

The rate relief comes against a backdrop of persistent affordability challenges. U.S. existing home sales fell 1.7% in July to a seasonally adjusted annual rate of 4.06 million units, according to the National Association of Realtors, as AP News reported. The median home sales price increased 2% from a year earlier to $434,100, with June’s median price of $442,800 marking an all-time high for any month on record.

“No one who has a home already can afford to sell it,” said Carl Weinberg, chief economist at High Frequency Economics. “People with ultra-low COVID-era mortgages cannot afford to give them up. If no one is selling, no one can be buying, and inventories are low.”

Inventory remains well below historical norms, with 1.54 million unsold homes at the end of July—well short of the roughly 2 million homes for sale that was typical before the pandemic. First-time buyers are particularly struggling, accounting for just 29% of sales in July, down from 33% in June and well below the historical average of about 40%.

Demand Trickles Back

The small rate decline was enough to bring some demand back to the market. Total home-loan applications rose 3.6% for the week, with refinances up 5% and purchases up 3%, according to the Mortgage Bankers Association’s weekly survey. The average contract rate on a 30-year fixed-rate conforming loan slipped to 6.77% from 6.81%, as CNBC reported.

“Mortgage rates declined slightly last week as oil prices dipped briefly on the hopes of a sustained resolution to the war in Iran,” said Joel Kan, vice president and deputy chief economist at the MBA.

However, the response was muted. Refinance applications remain 22% lower than the same week a year ago, and purchase applications are 1% below year-over-year levels. “As refinance incentives have dwindled with rates at current levels, the average loan size for refinance applications was down to its lowest level since July 2025,” Kan added.

The Iran War’s Lingering Impact

Mortgage rates have been mostly rising this year due to the U.S. war with Iran, which began in late February and fueled expectations for hotter inflation as crude oil prices soared. Before the conflict, the 10-year Treasury was just 3.97%, and 30-year mortgage rates sat around 5.98%. Even with recent easing in oil prices, long-term bond yields remain steeper than they were before the war began.

The Federal Reserve left its key interest rate unchanged at its July meeting, with three regional Fed bank presidents dissenting in favor of higher rates. The weak jobs report and cooling inflation have lowered the odds of a rate hike at the Fed’s September meeting, providing some support for mortgage rates.

“The latest jobs and inflation data took some pressure off mortgage rates and gave the Fed room to pause,” said Kara Ng, senior economist at Zillow, as Yahoo Finance reported. “But with Zillow forecasting mortgage rates only falling to 6.5% by year end, elevated borrowing costs are likely to slow housing activity in the second half.”

What to Watch

The rate relief may prove short-lived. Mortgage rates moved slightly higher to start the week according to Mortgage News Daily data, and the outlook depends heavily on whether inflation continues to cool, whether the Fed decides to hike rates in September, and whether the Iran conflict de-escalates—which would ease oil prices and bond yields.

With gas averaging $4.04 a gallon nationwide on August 12—16 cents higher than a month ago—oil prices remain a key risk factor. As Briefs.co noted, the window of slightly cheaper borrowing may be open—or it may close just as quickly. For buyers who have been waiting, the coming weeks could determine whether that window stays open.