The average long-term US mortgage rate climbs to 6.79% this week, its highest level since November
LOS ANGELES– The average long-term U.S. mortgage rate soared this week to its highest level since November, pushing up borrowing costs for would-be buyers at a time when the housing market is held back by near-record inventory of houses on the market.
Mortgage buyer Freddie Mac said on Thursday the average rate on the benchmark 30-year home loan rose to 6.79% from 6.57% last week. A year ago, the rate averaged 5.09%.
The latest increase marks the third in three weeks and takes the average rate on a 30-year home loan to its highest level since jumping to 7.08% in early November.
The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, rose to 6.18% this week from 5.97% last week. A year ago, it averaged 4.32%, Freddie Mac said.
High rates can add hundreds of dollars a month to homebuyers, limiting what they can afford in a market that remains unaffordable for many Americans after years of soaring home prices and historic lows. housing inventory.
Mortgage rates have risen with the 10-year Treasury yield, which lenders use as a guide for loan pricing. The yield hit 3.81% last week, its highest level since early March, reflecting bond investors’ uncertainty about the federal government’s ability to avoid a default and renewed concerns that the Federal Reserve will has not finished raising interest rates.
“Mortgage rates jumped this week as a buoyant economy prompted the market to price in the likelihood of another rate hike from the Federal Reserve,” said Sam Khater, chief economist at Freddie Mac. “While there has been a steady flow of buying demand around rates in the low to mid 6% range, that demand is likely to weaken as rates approach 7%.”
The House of Representatives on Wednesday approved a deal to prevent a possible default on US government debt. But uncertainty about what the Fed will do at its next interest rate policy meeting this month, and beyond, could keep the bond market on edge, leading to greater rate volatility. mortgages.
Investors’ expectations for future inflation, global demand for US Treasuries, and what the Fed is doing with interest rates influence mortgage rates.
The Fed has raised its benchmark interest rate 10 times in 14 months in an effort to reduce stubbornly high inflation. Fed Chairman Jerome Powell and other central bank officials recently signaled that the Fed may forgo another interest rate hike at this month’s policymakers’ meeting. Such a move would give the Fed time to assess the economic impact of its previous rate hikes.
Still, a pause now doesn’t mean the Fed couldn’t resume rising later this year. And other Fed officials continue to voice support for further hikes, given that inflation remains high. The consumer price index, which tracks consumer inflation, rose 4.9% in April from 12 months earlier.
The US housing market has been slow to regain its footing this year, with high mortgage rates and a tight inventory of homes on the market limiting sales. As a result, loans to purchase a home fell 44.3% in the first quarter compared to the same period last year, according to analysis released Thursday by real estate data firm Attom.
Rising rates sharply reduced demand for mortgage refinance loans, which fell 72.5% in the first quarter from a year earlier, Attom said.