The average U.S. 30-year mortgage rate climbed to 6.53% this week, the highest level in nine months and up from 6.51% last week. For prospective homebuyers like Maria Lopez, a first-time buyer watching listings in Phoenix, that kind of move can add hundreds of dollars a month to a payment and trim the home price she can realistically afford.
The increase lands at a moment when the housing market is already soft. Mortgage applications fell 8.5% last week, with refinancing demand accounting for a large share of the decline, while sales of previously occupied homes were essentially flat last month. New home sales also slipped 6.2% in April to a seasonally adjusted annual rate of 622,000 units, and through the first four months of this year they are down 6.5% from a year earlier.
Freddie Mac said the benchmark 30-year fixed rate mortgage rose to 6.53% from 6.51% a week earlier. The average rate on a 15-year fixed mortgage also edged higher, to 5.87% from 5.85%. That is still below the 6.89% level of a year ago for 30-year loans and below the 6.03% average on 15-year loans a year ago, even though the latest reading is the highest since Aug. 28, when the 30-year rate was 6.56%.
Mortgage rates do not move in a straight line. They are shaped by Federal Reserve policy, investors’ expectations for inflation and the economy, and especially by the path of the 10-year Treasury yield. That benchmark stood at 4.46% in midday trading Thursday, down from 4.57% a week ago, but still well above 3.97% in late February, before the war broke out. Expectations of higher oil prices have helped push long-term bond yields higher, and mortgage rates have mostly followed them upward since the conflict began.
That friction leaves buyers and refinancers in an awkward spot: rates are far cheaper than they were a year ago, but they are rising from the brief dip below 6% that ended in late February and have not returned there since. The next move will hinge on bond yields, oil prices and how investors read the inflation outlook, which means borrowers are unlikely to get much relief unless those pressures ease.
