The average rate on a 30-year mortgage in the U.S. held steady this week, not far from its highest levels this year, but below where it was a year ago.

The rate stood at 6.76% for the second week in a row, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.09%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, eased. The average rate dropped to 5.89% from 5.92% last week. It’s down from 6.38% a year ago, Freddie Mac said.

Factors Influencing Mortgage Rates

Mortgage rates are influenced by several factors, including global demand for U.S. Treasurys, the Federal Reserve’s interest rate policy decisions and bond market investors’ expectations about the economy and inflation.

After climbing to a just above 7% in mid-January, the average rate on a 30-year mortgage has remained above 6.62%, where it was just four weeks ago. It then spiked above 6.8% in the following two weeks and eased last week to 6.76%.

The recent swings in mortgage rates reflect volatility in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Treasury Yields and Market Volatility

The yield, which had mostly fallen after climbing to around 4.8% in mid-January, surged last month to 4.5% amid a sell-off in government bonds triggered by investor anxiety over the Trump administration’s trade war.

The 10-year Treasury yield was at 4.33% in midday trading Thursday, up from 4.26% late Wednesday.

Elevated mortgage rates and rising home prices remain affordability hurdles for many would-be homebuyers, key reasons why the spring homebuying season is off to a lackluster start, even as the inventory of homes on the market is up sharply from last year. Sales of previously occupied U.S. homes fell in March, posting the largest monthly drop since November 2022.

Affordability Challenges Persist for Homebuyers

The median monthly housing payment was $2,868 in the four weeks ended May 4, an all-time high, according to a new report from Redfin.

Economists expect mortgage rates to remain volatile in coming months, though they generally call for the average rate on a 30-year mortgage to remain above 6.5% this year.

On Wednesday, the Federal Reserve left its main interest alone, as was widely expected, even as it noted an increased risk of higher unemployment and inflation. While the Fed doesn’t set rates on home loans, its actions can influence the trajectory of mortgage rates.

“Looking ahead, the Fed’s wait-and-see approach is likely to keep mortgage rates at a high-6% in the near term, unless major policy developments or economic shifts occur, such as notable outcomes from the upcoming U.S.-China trade talks scheduled for this weekend,” said Jiayi Xu, economist at Realtor.com.