U.S. mortgage rates fall to 1-year low, boosting refinancings

U.S. mortgage rates fell this week to their lowest levels in more than a year, easing borrowing costs for potential homebuyers and prompting increased refinancing activity, Freddie Mac said Thursday. The average rate on a 30-year fixed mortgage slipped to about 6.17 percent from 6.19 percent a week earlier, while the average 15-year fixed rate declined to roughly 5.41 percent.

Freddie Mac's chief economist, Sam Khater, said mortgage rates "continued to trend down this week, hitting their lowest level in over a year." Khater also noted that refinancings have remained elevated, accounting for more than half of mortgage activity for several weeks, as homeowners seek to lock in lower rates.

Daily market gauges show short-term volatility. Zillow's recent daily averages have recorded the 30-year rate fluctuating in the low 6 percent range, with short-term swings up or down by a few basis points and the 15-year rate near the mid-5 percent range. Refinance rates are generally a touch higher than purchase rates but have followed the broader decline.

Several forces are driving the move. Mortgage yields typically track the 10-year Treasury, and the Treasury yield has risen at times this...