Key takeaways

• Mortgage rates fell for a second straight week, with the 30-year fixed-rate averaging 6.3% and the 15-year at 5.65%, according to Freddie Mac.


• The decline follows a U.S.–Iran ceasefire that has helped push mortgage rates down despite ongoing geopolitical risks.


• Lower rates have encouraged more refinancing activity, but home purchase demand continues to soften as many buyers remain cautious.

Mortgage rate averages fell to a four-week low — marking the second week of declines.

The 30-year, fixed-rate mortgage averaged 6.3% in the week ended Thursday, according to mortgage giant Freddie Mac. That's down from last week's average, and it's lower than this time last year, when the rate averaged 6.83%.

Similarly, the 15-year, fixed-rate mortgage was lower than this time last week and last year, averaging 5.65% as of Thursday.

It's a welcome relief for buyers and sellers alike after the recent run-up in mortgage rates driven by the conflict in the Middle East.

"Compared to one year ago ... this is a meaningful improvement for homebuyers during what is typically the busy spring homebuying season," Sam Khater, Freddie Mac's chief economist, said in a statement.

On a daily basis, the 30-year, fixed-rate mortgage was comparable to the weekly average, ending Wednesday at 6.32%. The 15-year, fixed-rate mortgage showed more volatility, though, hitting 5.97%, according to Mortgage News Daily.

It's been just over a week since the United States and Iran agreed to a two-week ceasefire. Though they've yet to come to terms to end the war altogether, the lull has proved at least temporarily beneficial for markets, including mortgage rates.

Daily measures of mortgage rates — which are more susceptible to change driven by news about the war— saw a decline in the immediate aftermath of the deal and have since hovered near weekslong lows. That trend eventually translates to mortgage rate averages, like those Freddie Mac reported.

That's ultimately the result of changes in the bond market, according to Brad Case, chief residential economist at Homes.com, who said the conflict has "had two opposing effects on bond yields, both of which flow through to mortgage rates."

"The first is that conflict and uncertainty tend to cause some investors to 'flee to safety,' which typically means U.S. Treasury securities, and that tends to reduce yields," he explained. "The second is that disrupting oil and gas supplies has increased the 'inflation premium,' causing a rise in bond yields. Neither of those effects has gone away, but recently the first seems to be dominating."

In other words, with more investors in the market for Treasury securities, mortgage rates are expected to ease.

Of course, it's not guaranteed that the trend will continue, and the risk of reignited conflict remains high. That said, without a significant change in negotiations, mortgage rates are likely pretty range-bound for now, according to Matthew Graham, chief operating officer at Mortgage News Daily.

"At this point, the average war update is not having a noticeable impact," he wrote in a Wednesday blog post. "It will take a material change in the status of the war and a clear response in energy prices to catch the bond market's attention."

The recent dip in mortgage rates — though modest — has brought some borrowers off the sidelines.

In the week ended Friday, applications for refinances rose 5% compared to the previous week and 15% from the previous year, according to the Mortgage Bankers Association. At the same time, demand for purchases decreased on a weekly and annual basis.

It's the latest sign that borrowers are feeling some wariness amid the ongoing conflict and resulting economic uncertainty, according to Melissa Cohn, regional vice president at William Raveis Mortgage.

“People are much more careful in pulling the trigger,” she said in a statement. “I have a large number of people who continue to extend their preapproval letters.” 

“If you feel confident in your situation, and you see something that’s a good opportunity, and it’s a home that you want to have, and you’ll be sorry you missed out on it, then buy it now," she added.