Mortgage Rates Climb During Peak Buying Season
The average 30-year mortgage rate rose to 6.38% from 6.22% last week, while the averge 15-year rate jumped to 5.75% from 5.54%.
WASHINGTON — The average long-term U.S. mortgage rate climbed this week to its highest level in more than six months, driving up borrowing costs during what’s typically the busiest time of the year for prospective home buyers.
The benchmark 30-year fixed rate mortgage rate rose to 6.38% from 6.22% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the rate averaged 6.65%.
The last time the average rate was higher was Sept. 4, when it was at 6.5%.
When mortgage rates rise, they can add hundreds of dollars a month in costs for home shoppers, limiting what they can afford to buy.
Only four weeks ago, the average rate had dropped to just under 6% for the first time since late 2022, but it has been rising as skyrocketing oil prices due to the war with Iran fuel worries about high inflation.
Meanwhile, borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also rose this week. That average rate rose to 5.75% from 5.54% last week. A year ago, it was at 5.89%, Freddie Mac said.
Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
The 10-year Treasury yield was at 4.39% at midday Thursday, up from around 4.26% a week ago. Treasury yields have been climbing as higher oil prices increase expectations for higher inflation. As long-term bond yields rise, that pushes up mortgage rates.
The average rate on a 30-year mortgage remains below where it was a year ago, which should benefit home shoppers who can afford to buy at current rates. But the recent ramp up in rates has begun to give many prospective home shoppers pause just as the spring homebuying season gets going.
Mortgage applications fell 10.5% last week from the previous week, according to the Mortgage Bankers Association. Applications for both purchase and mortgage refinancing loans declined.
“Higher borrowing costs, affordability pressures and economic uncertainty are likely prompting some prospective buyers to delay purchase decisions,” MBA CEO Bob Broeksmit said in a statement.
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