Home loan rates climbed higher for the second week in a row, driven by unstable bond markets as escalating oil costs from the Iranian conflict spark concerns about rising inflation.
According to mortgage giant Freddie Mac’s Thursday report, the standard 30-year fixed mortgage rate increased to 6.37% from the previous week’s 6.3%. Despite this uptick, rates remain lower than the 6.76% average recorded twelve months ago.
These consecutive weekly jumps have pushed the typical rate back to its position from a month earlier.
Homeowners looking to refinance also face higher costs, as 15-year fixed mortgage rates climbed to 5.72% from 5.64% the week before. Freddie Mac noted this rate stood at 5.89% one year ago.
Multiple elements shape mortgage pricing, including Federal Reserve policy choices and bond market investors’ outlook on economic growth and inflation trends.
Home loan rates typically follow the movement of 10-year Treasury bond yields, which serve as a benchmark for lenders when setting mortgage prices.
Thursday’s midday bond trading showed the 10-year Treasury yield at 4.37%. This represents a significant jump from late February’s 3.97% level, before the Iranian conflict began.
Rising mortgage costs can burden prospective homebuyers with additional monthly payments of hundreds of dollars, reducing their purchasing power.
Just weeks ago in late February, 30-year mortgage rates had dropped below 6% for the first time since late 2022, but haven’t returned to that level since.
Although current rates remain below last year’s levels, the unpredictable rate swings and broader economic impacts from Middle Eastern tensions have dampened what should be the housing market’s busiest season.
Home sales data shows existing home purchases declined year-over-year during the first quarter, continuing a nationwide housing downturn that began in 2022 when mortgage rates started climbing from their pandemic-era lows.
