The average long-term U.S. mortgage rate rose for the fourth consecutive week to its highest level in a year, another setback for prospective homebuyers hoping for a break from elevated home loan borrowing costs.
The benchmark 30-year fixed rate mortgage rate rose to 6.66% from 6.58% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.72%.
Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing power. As rates rise, that can lead prospective home shoppers to delay buying a home, one reason U.S. home sales have been sluggish this year.
Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose this week. That average rate increased to 6.04% from 5.96% last week. A year ago, it was at 5.85%, 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.
Rates have been mostly rising this year as the conflict in Iran has driven crude oil prices sharply higher, fueling expectations of hotter inflation. That’s pushed up long-term bond yields relative to where they were before the conflict began in late February, causing mortgage rates to trend higher.
The 10-year Treasury yield was 4.66% at midday Thursday on the bond market. It was just 3.97% in late February, before the war broke out.
