U.S. 30-year fixed mortgage rates have seen recent declines, with a significant drop recorded on Friday following a presidential directive. The average 30-year rate decreased to 5.99% after President Donald Trump instructed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds, according to Mortgage News Daily. This rate matches a low last seen on February 2, 2023. Earlier in the week, mortgage buyer Freddie Mac reported the average 30-year rate at 6.15%, marking its lowest point in 2025, a reduction from 6.18% the prior week and 6.91% one year ago.
Recent Mortgage Rate Movements
According to Freddie Mac, the average rate for a 30-year U.S. mortgage fell to 6.15% this week, identified as its lowest point in 2025. This figure represents a slight decrease from the 6.18% recorded in the preceding week and is lower than the 6.91% average observed a year prior. The last instance of rates at a similar level was on October 3, 2024, when they reached 6.12% before an increase.
Rates for 15-year fixed-rate mortgages also decreased, reaching 5.44% this week, down from 5.5% in the previous week. One year ago, the average for 15-year mortgages was 6.13%.
Presidential Directive and Immediate Impact
On Friday, mortgage rates declined further after President Donald Trump announced instructions for Fannie Mae and Freddie Mac to acquire $200 billion in mortgage bonds. Following this announcement, the 30-year mortgage rate decreased by 22 basis points to 5.99%, according to Mortgage News Daily, reaching a level last observed on February 2, 2023. The President stated that this action is intended to lower mortgage rates, reduce monthly payments, and enhance home affordability.
Role of Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac, operating under government conservatorship, play a role in the mortgage market by acquiring loans from lenders. They then package these loans into mortgage-backed securities (MBS) and sell them to investors. This process is designed to replenish lender funds, facilitate new loans, and contribute to lower and more stable interest rates for homebuyers. Historically, purchases of mortgage-backed bonds and securities have influenced mortgage rates downwards. During the initial phase of the Covid-19 pandemic, the Federal Reserve acquired a substantial volume of agency MBS, contributing to record-low 30-year fixed mortgage rates of 2.75% in early 2021.
Expert Analysis and Projections
Analysts generally anticipate potential mortgage rate reductions ranging from 25 to 50 basis points following the presidential directive, with some forecasting larger drops. Analysts at UBS suggested that $200 billion in MBS purchases could lead to a 10-25 basis point reduction, potentially bringing the 30-year rate to approximately 6.0% from a recent 6.21%. The exact timeframe for the full implementation and impact of these purchases remains unconfirmed.
A hypothetical reduction in rates to 5.9% for a median-priced home of $425,000, with a 20% down payment on a 30-year fixed mortgage, could result in a $118 decrease in the monthly payment. While potentially beneficial for first-time homebuyers, the down payment continues to pose a significant financial barrier for many. Homebuilder stocks reportedly increased after the announcement.
Economists generally project that the average rate on a 30-year mortgage will remain slightly above 6% in the upcoming year.
Broader Housing Market Dynamics
Current market conditions show an increase in home listings compared to 2024, with some sellers adjusting initial asking prices due to longer selling periods, as reported by Realtor.com data. However, affordability remains a challenge for prospective homeowners, particularly first-time buyers who may lack existing home equity for down payments. Economic and job market uncertainties are also cited as factors causing some potential buyers to defer purchases.
Sales of previously occupied U.S. homes increased in November compared to the prior month but decreased year-over-year for the first time since May, even with average long-term mortgage rates near their annual low. For the first 11 months of the year, home sales are down 0.5% compared to the same period in the previous year. Broader market affordability, influenced by consumer financial strain and a nearly 50% increase in home prices compared to pre-pandemic levels, is also a factor in buyer activity.
Factors Influencing Mortgage Rates
Mortgage rates are influenced by various factors, including the Federal Reserve's interest rate policy decisions and bond market investor expectations concerning the economy and inflation. These rates typically align with the trajectory of the 10-year Treasury yield, which serves as a benchmark for pricing home loans. The 10-year yield stood at 4.14% at midday Wednesday, a marginal decrease from 4.15% last week. Mortgage rates began to ease in July in anticipation of a series of Federal Reserve rate cuts, which commenced in September and continued this month. While the Federal Reserve does not directly set mortgage rates, its short-term rate cuts can signal lower inflation or slower economic growth, potentially prompting investors to purchase U.S. government bonds. This action can contribute to lower yields on long-term U.S. Treasurys, which may subsequently lead to reduced mortgage rates. However, Fed rate cuts do not consistently result in lower mortgage rates.