According to weekly data compiled by mortgage buyer Freddie Mac, the average long-term mortgage rate in the United States climbed this week to the highest level since November.
The 30-year fixed mortgage rate increased to 6.81% this week from 6.71% the previous week. It was 5.30% on average a year ago.
“Mortgage rates continued their upward trajectory again this week, rising to the highest rate this year so far,” said Sam Khater, Freddie Mac’s chief economist.
Meanwhile, the average rate on a 15-year fixed mortgage was up this week at 6.24%. Last week it averaged 6.06%. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.45%.
“This upward trend is being driven by a resilient economy, persistent inflation and a more hawkish tone from the Federal Reserve. These high rates combined with low inventory continue to price many potential homebuyers out of the market,” Khater continued.
Mortgage rates tend to match the yield on the 10-year Treasury note rather than the Fed’s rate rises. Investors’ forecasts for future inflation, global demand for US Treasury bonds, and what the Fed does with interest rates can all have an impact on mortgage rates.
Since its first boost in March 2022, the Fed has raised its benchmark interest rate to around 5.1%, its highest level in 16 years, before deferring a hike at its policymakers’ meeting last month.
The average 30-year mortgage rate is still more than double what it was two years ago, when ultra-low interest rates fueled a flood of home sales and refinancing. The much higher rates currently adding to the low inventory by preventing homeowners who locked in lower borrowing costs two years ago from selling.
The scarcity of available houses is another reason home sales have been weak this year. According to the National Association of Realtors, sales of previously occupied U.S. homes were down 20.4% year on year last month, marking the 10th straight month of annual reductions of 20% or more.