The 30-year mortgage rate in the US falls to 6.72%, offering slight relief for buyers
by VT Markets
/
Jul 31, 2025
The US 30-year mortgage rate has dropped to 6.72%. This offers a slight relief amid high home prices and borrowing costs. Last week, the rate was 6.74%, and it peaked at 7.04% earlier this year. The lowest point this year was 6.62%. Even with this decrease, the market is still struggling with falling sales.
Treasury Yield and Economic Implications
The current 30-year mortgage rate of 6.72% is linked to the 10-year Treasury yield, which is around 4.35%. This small drop suggests that bond markets are worried about future economic growth. For traders, interest rate futures are becoming increasingly important, as even minor adjustments in economic data could lead to bigger price changes.
This dip in borrowing costs has sparked discussions about what the Federal Reserve might do next, and we expect this will be a key topic for the rest of the summer. Looking back at late 2023, traders began betting on rate cuts before the Fed signaled anything. Currently, fed funds futures indicate a 45% chance of a rate cut by the December 2025 meeting, up from just 30% last month.
With the ongoing struggle between persistent inflation and a slowing economy, we may see increased volatility in the bond market. The MOVE Index, which measures Treasury market volatility, has been rising from earlier lows this year, reminiscent of the ups and downs seen in 2024. This situation hints that strategies aimed at profiting from larger interest rate movements could become more appealing.
Impact on Housing Market
This slight rate drop won’t immediately solve the housing market issues, as high home prices remain a significant obstacle. Data from the National Association of Realtors for June 2025 shows that existing home sales are still down 4% compared to a year ago. Traders in derivatives should pay close attention to homebuilder ETFs like XHB, as their stock prices are very responsive to changes in interest rate expectations.
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by VT Markets
Jul 31, 2025
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