Home loan rates across the United States reached their peak level in nearly nine months this week, increasing borrowing expenses for potential homebuyers during the spring season when housing activity typically reaches its annual high.
Freddie Mac reported Thursday that 30-year fixed mortgage rates increased to 6.51%, up from the previous week’s 6.36%. While this represents a significant jump, current rates still sit lower than the 6.86% recorded one year ago.
Rising mortgage rates can increase monthly payments by hundreds of dollars for borrowers, which decreases how much home they can afford to purchase.
Just in late February, 30-year mortgage rates had dropped below the 6% mark for the first time since late 2022. Since then, rates have remained above that level and now sit at their highest point since August 28, when they reached 6.56%.
Rates for 15-year fixed mortgages, which homeowners often choose when refinancing, also increased this week. These rates jumped to 5.85% from 5.71% the previous week. Freddie Mac noted this compares to 6.01% one year ago.
Several elements affect mortgage rates, including Federal Reserve policy choices and bond market investors’ economic and inflation forecasts. Home loan pricing typically tracks the 10-year Treasury yield, which lenders use as a benchmark.
Rates have generally moved upward since the conflict with Iran started. Energy markets have been disrupted by the Strait of Hormuz closure, causing crude oil prices to surge significantly and driving inflation concerns.
Projections of rising oil costs and concerns about expanding government debt have increased yields on long-term bonds.
Thursday’s midday bond market trading showed the 10-year Treasury note yield at 4.6%. This compares to 4.47% one week earlier and just 3.97% in late February before the war began.
Though current long-term mortgage rates remain below last year’s levels, their recent climb has contributed to slower sales during this spring’s homebuying period.
Last month’s sales of existing homes across the country stayed essentially unchanged after declining year-over-year during the first quarter, continuing a national housing downturn that started in 2022 when mortgage rates began rising from pandemic-era record lows.
