Mortgage Rates Climb, Pushing 30-Year Home Loan Costs to Four-Week High
POLICY WIRE — Washington, D.C. — This week saw a slight increase in mortgage rates, bringing the average 30-year fixed-rate mortgage back to its level from four weeks prior, according to Freddie Mac....
POLICY WIRE — Washington, D.C. — This week saw a slight increase in mortgage rates, bringing the average 30-year fixed-rate mortgage back to its level from four weeks prior, according to Freddie Mac.
The average rate for a 30-year mortgage has risen to 6.66% from 6.65% last week. A year ago, this rate stood at 6.56%.
The rise in mortgage rates can significantly increase monthly costs for borrowers, potentially reducing their purchasing power. Higher rates may also cause potential homebuyers to postpone their purchases, contributing to the stagnant U.S. home sales this year.
Currently, the average rate is nearly at 6.69%, which was the highest point this year, reached earlier in the month.
Rates for 15-year fixed-rate mortgages, commonly chosen for refinancing, also increased this week to 5.98% from 5.95% last week. A year ago, this rate was 5.69%.
Several factors influence mortgage rates, including inflation, Federal Reserve policy decisions, and economic expectations from bond market investors. These rates typically align with the 10-year Treasury yield, which lenders use as a benchmark for pricing home loans.
Both mortgage rates and the bond market have generally been on an upward trend this year, partly due to the U.S. conflict with Iran, which has heightened inflation expectations as crude oil prices surged. Long-term bond yields have remained higher than before the conflict began in late February, pushing mortgage rates up.
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Concerns over the U.S. government’s increasing debt have also contributed to higher long-term bond yields. The U.S. Treasury Department intervened last week, although analysts suggest the impact may be limited.
As of midday Thursday, the 10-year Treasury yield was at 4.66%. Prior to the conflict, it was 3.97% in late February.
The U.S. housing market has faced challenges since 2022, when mortgage rates started to rise from pandemic-era lows. Sales of existing U.S. homes remained flat last year, at a 30-year low, and slowed further in July.
Reporting by Policy-Wire (PW)