Current:Home > MyAverage long-term US mortgage rate edges closer to 7%, rising to highest level since early March-InfoLens
Average long-term US mortgage rate edges closer to 7%, rising to highest level since early March
View Date:2025-01-09 21:38:08
LOS ANGELES (AP) — The average long-term U.S. mortgage rate rose to its highest level in five weeks, a setback for prospective homebuyers during what’s traditionally the busiest time of the year for home sales.
The average rate on a 30-year mortgage rose to 6.88% from 6.82% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.27%.
When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford at a time when the U.S. housing market remains constrained by relatively few homes for sale and rising home prices.
Rates have been mostly drifting higher in recent weeks as stronger-than-expected reports on employment and inflation have stoked doubt among bond investors over how soon the Federal Reserve will move to lower its benchmark interest rate. The central bank has signaled that it expects to cut its short-term rate three times this year once it sees more evidence of cooling inflation.
On Wednesday, Treasury yields jumped in the bond market following a report showing that inflation was hotter last month than economists expected. The March consumer prices report was the third straight showing inflation readings well above the Fed’s 2% target. A report on Thursday showed inflation at the wholesale level was a touch lower last month than economists expected.
The yield on the 10-year Treasury, which lenders use as a guide to pricing loans, jumped to 4.57% on Thursday afternoon, it’s highest level since November. How the bond market reacts to the Fed’s interest rate policy, the moves in the 10-year Treasury yield, as well as other factors can influence mortgage rates.
After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has remained below 7% since early December, though it also hasn’t gone below the 6.6% it averaged in mid January.
Mortgage rates will likely continue to hover between that 6.6% and 7% range until inflation shows convincing progress towards the Fed’s target, said Hannah Jones, Realtor.com’s senior economic research analyst.
“Eager buyers and sellers are hoping to see more favorable housing conditions as the spring selling season kicks off,” said Jones. “However, mortgage rates have offered little relief as economic data, as measured by both inflation and employment, remains strong.”
The U.S. housing market is coming off a deep, 2-year sales slump triggered by a sharp rise in mortgage rates and a dearth of homes on the market. The overall pullback in mortgage rates since their peak last fall helped spur a pickup in sales the first two months of this year.
Sales of previously occupied U.S. homes rose in February from the previous month to the strongest pace in a year. That followed a month-to-month home sales increase in January.
Still, the average rate on a 30-year mortgage remains well above where it was just two years ago at 5%. That large gap between rates now and then has helped limit the number of previously occupied homes on the market because many homeowners who bought or refinanced more than two years ago are reluctant to sell and give up their fixed-rate mortgages below 3% or 4%.
Many economists still expect that mortgage rates will ease moderately later this year, though most forecasts call for the average rate on a 30-year home loan to remain above 6%.
The cost of refinancing a home loan also got pricier this week. Borrowing costs on 15-year fixed-rate mortgages, often used to refinance longer-term mortgages, rose this week, pushing the average rate to 6.16% from 6.06% last week. A year ago it averaged 5.54%, Freddie Mac said.
veryGood! (78)
Related
- Today’s Savannah Guthrie, Al Roker and More React to Craig Melvin Replacing Hoda Kotb as Co-Anchor
- Raise a Glass to These Photos of Prince William and Rob McElhenney at Wrexham Pub
- Viral article used AI to create photo of Disney World's Cinderella Castle on fire
- Northern California braces for snow storm with Blizzard Warnings in effect. Here's the forecast.
- MVSU football player killed, driver injured in crash after police chase
- Social media is giving men ‘bigorexia,' or muscle dysmorphia. We need to talk about it.
- Driver crashes SUV into Michigan Walmart, leaving multiple people injured
- Health care company ties Russian-linked cybercriminals to prescriptions breach
- Satellite images and documents indicate China working on nuclear propulsion for new aircraft carrier
- This week on Sunday Morning (March 3)
Ranking
- Fantasy football Week 11: Trade value chart and rest of season rankings
- Prosecutors drop charges against former Iowa State athletes in gambling investigation
- Train derailment leaves cars on riverbank or in water; no injuries, hazardous materials reported
- Three ways to think about journalism layoffs; plus, Aaron Bushnell's self-immolation
- New 'Yellowstone' is here: Season 5 Part 2 premiere date, time, where to watch
- U.S. Center for SafeSport needs independence and increased funding, commission says
- Driver rescued after crashed semi dangles off Louisville bridge: She was praying
- Map shows falling childhood vaccination rates in Florida as state faces measles outbreak
Recommendation
-
The Daily Money: Inflation is still a thing
-
Prosecutors drop charges against former Iowa State athletes in gambling investigation
-
Celebrated stylemaker and self-named 'geriatric starlet' Iris Apfel dies at age 102
-
'White Christmas' child star Anne Whitfield dies after 'unexpected accident,' family says
-
Lala Kent Swears by This Virgo-Approved Accessory and Shares Why Stassi Schroeder Inspires Her Fall Style
-
Pharrell encouraged Miley Cyrus to 'go for it' and shed Hannah Montana image from Disney
-
A White House Advisor and Environmental Justice Activist Wants Immediate Help for Two Historically Black Communities in Alabama
-
Kate Winslet's 'The Regime' is dictators gone wild. Sometimes it's funny.