(Bloomberg) -- Mortgage rates in the US dropped for a second straight week.
The average for 30-year loans was 6.95%, down from 6.96% last week, Freddie Mac said in a statement.
House hunters have gotten a smidge of relief after borrowing costs topped 7% earlier this month. Stability in mortgage rates may be key to unlocking pent-up demand during the upcoming spring homebuying season, but with loans still expensive and prices continuing to rise, affordability remains a hurdle.
Buyers pulled back from the market as rates were climbing toward the end of last year. Contracts to purchase resale homes in the US slid 5.5% in December following four straight monthly gains, the National Association of Realtors reported Thursday.
After three cuts last year, the Federal Reserve held its benchmark lending rate steady on Wednesday, giving policymakers more time to assess progress on inflation before making any further reductions.
Yields for the government bonds that tend to guide mortgages have fluctuated as traders speculate over the potential impact of President Donald Trump's economic agenda. His proposed tariffs "will almost certainly be inflationary," said Joel Berner, senior economist at Realtor.com.
"Rising inflation will further tie the hands of the Federal Reserve, preventing direct decreases to interest rates, and indirectly will pull mortgage rates up as debt market investors demand greater future returns in response," Berner said.
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