Mortgage Rates Ease to 6.48% in Welcome Relief for Buyers as Prices Also Soften

Mortgage rates retreated from their nine-month-high peaks Thursday as the uneasy ceasefire between the U.S. and Iran cooled global energy prices, easing pressure on bond markets and borrowing costs. 

The average rate on 30-year fixed home loans decreased to 6.48% for the week ending June 4, down 5 basis points from 6.53% the previous week, according to Freddie Mac. For perspective, rates averaged 6.85% during the same period in 2025.

"The 30-year fixed-rate mortgage decreased to 6.48% this week," says Sam Khater, Freddie Mac's chief economist. "With mortgage rates in the mid-6% range and income growth outpacing home price growth, housing affordability is marginally improving."

Realtor.com® senior economist Joel Berner says that the 10-year Treasury yield held below 4.5% through the end of last week before inching up early this week, offering mortgage rates enough room to pull back. 

The news surrounding a potential peace agreement with Tehran has been uneven as the conflict entered its fourth month. 

"At times the market seems to react positively to diplomatic developments, and then soon after we hear about missiles being fired or talks breaking down," says Berner. 

On Wednesday, the House passed a war powers resolution aimed at putting an end to the military action in Iran. Although mostly symbolic, the measure received the support of four Republican congress members in a rare rebuke to President Donald Trump.   

The president promptly lashed out at the GOP lawmakers who crossed party lines to vote with their Democratic colleagues, slamming them as "grandstanders." Trump characterized the Republicans' actions as "unpatriotic,” saying they occurred during what he claimed to be his "final negotiations" to end the war. 

"This conflict is currently the main driver of still-high mortgage rates, as the oil shock ripples inflation fears throughout the global economy," notes Berner. "We expect to see further mortgage rate relief once the Strait of Hormuz is opened for good.”

According to the economist, this week’s rate easing comes as welcome news for aspiring home buyers who may have been reluctant to make a move so far this year despite market conditions moving strongly in their favor. 

Listing prices have now fallen on a year-over-year basis for seven consecutive months, the inventory of for-sale homes is the highest it has been since 2019, and time on market continues to slow, offering shoppers more leverage. 

Despite these flashing green lights for buyers, high mortgage rates and low consumer sentiment stemming from the war in Iran have led to only a 2.6% annual improvement in the number of contract signings in May. 

"The housing market is ready for takeoff, but further rate relief and stronger buyer confidence are needed to end the ground stop," concludes Berner.

How mortgage rates are calculated

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.

When the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to increase. Conversely, signs of falling inflation or weakness in the labor market usually send Treasury yields lower, causing mortgage rates to 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.

How your credit score affects your mortgage

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.

Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates, which can reduce monthly payments.

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. Ultimately, they want to make sure you're able to pay back th