Average US long-term mortgage rate ticks down to 6.18% this week

The average rate on a 30-year US mortgage ticked down modestly this week, remaining in the same narrow range of the past two months.

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The average long-term mortgage rate fell to 6.18% from 6.21% last week, mortgage buyer Freddie Mac said Wednesday. A year ago, the rate averaged 6.85%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, rose this week. The rate averaged 5.50%, up from 5.47% last week. A year ago it averaged 6%, Freddie Mac said.

Mortgage rates are influenced by several factors, from the Federal Reserve's interest rate policy decisions to bond market investors' expectations for the economy and inflation. They generally follow the trajectory of the IO-year Treasury yield, which lenders use as a guide to pricing home loans.

The IO-year yield was at 4.15% at midday Wednesday, up modestly from last week's 4.12%.

The average rate on a 30-year mortgage has been mostly holding steady in recent weeks since Oct. 30 when it dropped to 6.17%, its lowest level in more than a year.

Mortgage rates began easing in July in anticipation of a series of Fed rate cuts, which began in September and continued this month.

The Fed doesn’t set mortgage rates, but when it cuts its short-term rate that can signal lower inflation or slower economic growth ahead, which can drive investors to buy US government bonds. That can help lower yields on long-term US Treasurys, which can result in lower mortgage rates.