KBRA Financial Intelligence

Mortgage Rates in Focus Amid Rebound in Home Purchases

Data from Freddie Mac’s Primary Mortgage Market Survey indicates that the average interest rate on a 30-year fixed mortgage has declined across each of the past five months. Since closing out October at 6.17%, the rate has risen slightly in November, increasing to 6.24% amid speculation that accelerating economic growth and above-target inflation might delay further monetary easing at the Federal Reserve.

Earlier this year, KBRA Financial Intelligence (KFI) noted that persistently high mortgage rates likely played a role in discouraging prospective buyers who may choose to delay purchases in anticipation of more favorable borrowing conditions. However, receding rates appear to have inspired a modest rebound in U.S. banks’ mortgage loan growth, which increased by 1.8% year-over-year (YoY) in 3Q 2025. Though that’s the fastest rate of mortgage loan growth recorded in 2025, it trailed the growth of total bank lending for a fifth straight quarter.

KFI has highlighted the critical role home prices play in determining the trajectory of inflation via the shelter components of key inflation gauges. Therefore, home price trends carry significant weight in determining the Fed’s approach to monetary policy. Despite a recent uptick in home sales, price growth has slowed aggressively. The YoY increase in home purchase prices was reported at just 2.3% in August, according to Federal Housing Finance Agency (FHFA) data. That marks the smallest annual rise recorded in the past 13 years. Further, National Association of Realtors’ (NAR) data indicates that inventory of existing single-family homes for sale has risen by 13.4% over the past year of data, potentially contributing to softer home price gains in recent months.

Among nearly 4,300 U.S. commercial and savings banks reporting residential mortgage holdings in 3Q 2025, the average residential mortgage delinquency rate was 1.54%, exceeding the five-year moving average for a fourth straight quarter. Though delinquency among residential mortgage loans remains low in historical terms, the sustained move higher represents an entrenched reversal of the downtrend witnessed throughout most of the past decade.

Still, the uptick in delinquency should be viewed in context: a long period of strong payment history among mortgage borrowers has pushed owners’ equity in U.S. households’ real estate assets to nearly 73%, according to the most recently released Fed data—indicating that the average U.S. household is less leveraged in real estate than at any other time since the 1960s.