<\/p>\n
The average long-term U.S. mortgage rate rose again this week, reaching its highest level in nine months, another setback for prospective homebuyers.<\/p>\n
The benchmark 30-year fixed rate mortgage rate rose to 6.53% from 6.51% last week, mortgage buyer Freddie Mac said Thursday. Despite the latest increase, the average rate remains below 6.89%, where it was a year ago.<\/p>\n
When mortgage rates rise they can add hundreds of dollars a month in costs for borrowers, reducing their purchasing power.<\/p>\n
Rates have been mostly trending higher since the war with Iran<\/a><\/span> began, disrupting the passage of tankers ferrying crude oil from the Persian Gulf to customers worldwide. That\u2019s sent oil prices sharply higher \u2014 a key driver of inflation<\/a><\/span>. <\/p>\n Mortgage rates are influenced by several factors, from the Federal Reserve\u2019s interest rate policy decisions to bond market investors\u2019 expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.<\/p>\n Expectations of higher oil prices have pushed up long-term bond yields,<\/a><\/span> causing mortgage rates to head higher.<\/p>\n Bond yields have been easing this week amid hopes that the United States and Iran may reach a deal to reopen the Strait of Hormuz and get oil flowing again. The yield on the U.S. 10-year Treasury note was at 4.46% in midday trading Thursday on the bond market, down from 4.57% a week ago. It was just 3.97% in late February, before the war broke out.<\/p>\n Meanwhile, borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also rose this week. That average rate rose to 5.87% from 5.85% last week. A year ago, it was at 6.03%, Freddie Mac said.<\/p>\n As recently as late February, the average rate on a 30-year mortgage had slipped just under 6% for the first time since late 2022. It\u2019s hasn\u2019t fallen below that threshold since. It\u2019s now at its highest level since August 28, when it was 6.56%.<\/p>\n While average long-term mortgage rates remain lower than they were at this time last year, their recent increase has put a damper on sales so far this spring homebuying season.<\/p>\n Sales of previously occupied U.S. homes were essentially flat last month<\/a><\/span> after declining from a year earlier in the first three months of the year, extending a nationwide housing slump<\/a><\/span> that dates back to 2022 when mortgage rates began to climb from pandemic-era lows.<\/p>\n Demand for newly built homes has also been lackluster. New home sales fell 6.2% in April to a seasonally adjusted annual rate of 622,000 units, the U.S. Census Bureau reported Thursday. <\/p>\n Through the first four months of this year, new home sales are down 6.5% from where they were at this time last year, even as many homebuilders continue to lower prices and offer incentives to woo home shoppers.<\/p>\n New data on mortgage applications points to ongoing weakness. <\/p>\n Mortgage applications, which include loans to buy a home or refinance an existing mortgage, fell 8.5% last week from a week earlier as mortgage rates marched higher, according to the Mortgage Bankers Association. A pullback in demand for mortgage refinancing loans accounted for a big share of the overall decline.<\/p>\n One bright spot: Applications for loans to buy a home continued to run ahead of last year\u2019s pace.<\/p>\n Home shoppers who are undeterred by rising mortgage rates are benefiting from buyer-friendly trends in many markets, including more properties on the market than a year ago and data showing home listing prices have started falling in many metro areas, especially in the South and Midwest.<\/p>\n \u201cBuyers have more homes to choose from and asking prices continue to soften, but their dollars don\u2019t stretch as far as they did a few months back,\u201d said Jake Krimmel, senior economist at Realtor.com. \u201cA resolution to the (U.S.-Iran) conflict, therefore, would do a world of good for mortgage rates, consumers, and housing market momentum.\u201d<\/p>\n<\/p><\/div>\n