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Mortgage rates saw another minor tick down compared with the previous week, offering homebuyers a promise of some market stability through the spring buying and selling season.
The average rate on 30-year fixed home loans decreased to 6.64% for the week ending April 3, down from 6.65% the previous week, according to Freddie Mac. Rates averaged 6.82% the same week in 2024.
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“Over the last month, the 30-year fixed rate has settled in, making only slight moves in either direction,” says Sam Khater, Freddie Mac’s chief economist. “This stability is reassuring, and borrowers have responded with purchase application demand rising to the highest growth rate since late last year.”
This week’s mortgage rate readout will serve as a key benchmark for the rest of the year, considering that it is based on data pre-dating President Donald Trump’s tariff rollout.
“President Trump announced a sweeping range of tariffs on Wednesday afternoon that have sent the markets recoiling, and the impact of which will be seen in mortgage rates reported in the coming weeks,” says Realtor.com® senior economist Joel Berner.
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The yield on the 10-year Treasury note, which already had been on a downward trajectory, has dipped even further on Thursday morning, as investors are exiting the stock market.
According to Berner, that likely means that mortgage rates will continue to drop in the coming months as a result.
“This shock to the system will be felt in the housing market for the rest of the year,” predicts Berner.
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Whether lower mortgage rates would spur prospective homebuyers to make a move this year remains an open question, considering the great deal of uncertainty surrounding the controversial tariff policy and its impact on the stock market.
“There has been encouraging news in recent months, even during these high mortgage rates, that home sales are picking up relative to a slow 2024,” says Berner. “This week’s minor bit of relief may be enough to keep up this positive momentum, or the fallout from the tariff announcement may shake buyers’ confidence.”
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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.
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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 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.
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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.
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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.
