The average long-term U.S. mortgage rate rose this week to the highest level since November, according to weekly data compiled by mortgage buyer Freddie Mac.
The rate on the 30-year fixed mortgage rose to 6.81% this week from 6.71% a week ago. One year ago, it averaged 5.30%.
"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%.
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"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 don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans.
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Beginning with its first hike in March 2022, the Fed has lifted its benchmark interest rate to about 5.1%, its highest level in 16 years, before forgoing a hike at its meeting of policymakers last month.
The average rate on a 30-year mortgage remains more than double what it was two years ago, when ultra-low rates spurred a wave of home sales and refinancing. The far higher rates now are contributing to the low level of available homes by discouraging homeowners who locked in those lower borrowing costs two years ago from selling.
The dearth of properties on the market is also a key reason home sales have been slow this year. Last month, sales of previously occupied U.S. homes were down 20.4% from as year earlier, marking 10 consecutive months of annual declines of 20% or more, according to the National Association of Realtors.
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The Associated Press contributed to this report.
