By ALEX VEIGA, AP Business Writer
The average long-term U.S. mortgage rate rose again this week, reflecting ongoing bond market volatility as surging oil prices due to the war with Iran heighten inflation worries.
The benchmark 30-year fixed rate mortgage rate rose to 6.37% from 6.3% last week, mortgage buyer Freddie Mac said Thursday. Thatap still down from one year ago, when the rate averaged 6.76%.
This is the second straight weekly increase, bringing the average rate back to where it was four weeks ago.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also moved higher this week. That average rate rose to 5.72% from 5.64% 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 to bond market investors’ expectations for the economy and inflation.
The average rate on a 30-year home loan echoes the trajectory of U.S. 10-year Treasury bond yields, which lenders use as a guide to pricing home loans.
The 10-year Treasury yield was at 4.37% in midday trading Thursday on the bond market. The yield was at just 3.97% in late February, before the broke out.
When mortgage rates rise, they can add hundreds of dollars a month in costs for home shoppers, limiting what they can afford to buy.
As recently as late February, the average rate on a 30-year mortgage had slipped just under 6% for the first time since late 2022. Itap hasn’t fallen below that threshold since.
While the average rate has remained below where it was a year ago, the rate volatility and other economic fallout from the conflict in the Middle East have contributed to a lackluster start to the traditionally the busiest stretch of the year for the housing market.
Sales of previously occupied U.S. homes were down from a year earlier in the first three months of the year, that dates back to 2022, when mortgage rates began to climb from pandemic-era lows.
“The expectation of rates below 6% this spring has disappeared, and buyers and sellers likely will face rates in the mid-6% range into the summer,” said Lisa Sturtevant, chief economist at Bright MLS.
Home shoppers who are undeterred by the mortgage rate volatility are likely to benefit from buyer-friendly trends in many markets.
Last month, the number of homes for sale rose 4.6% from a year earlier, as properties took longer to sell, according to Realtor.com.
Many sellers are responding to the softer market by lowering their asking price. List prices fell in April from a year earlier for the sixth month in a row.
