Average long-term US mortgage rates have climbed once more this week, propelled by bond market volatility and escalating inflation fears stemming from surging oil prices amid the ongoing conflict with Iran.
Latest Rate Increases
The benchmark 30-year fixed-rate mortgage reached 6.37%, up from 6.3% last week, according to Freddie Mac. This marks the second consecutive weekly increase, though it remains below the 6.76% recorded a year ago. Similarly, 15-year fixed-rate mortgages, a popular choice for refinancing, edged up to 5.72% from 5.64%.
Market Dynamics
Mortgage rates are closely tied to Federal Reserve policy and bond market expectations regarding the economy and inflation. The average 30-year home loan rate mirrors the yield on US 10-year Treasury bonds, which lenders use as a pricing benchmark. The 10-year Treasury yield stood at 4.37% on Thursday, a notable rise from 3.97% in late February, before the war with Iran began.
Rising mortgage rates translate into hundreds of dollars in additional monthly costs for homebuyers, significantly curtailing their purchasing power. The average 30-year mortgage rate briefly dipped below 6% in late February for the first time since late 2022, a threshold that has not been revisited since.
Impact on Homebuying Season
This volatility, combined with the economic fallout from the Middle East conflict, has resulted in a sluggish spring homebuying season. Lisa Sturtevant, chief economist at Bright MLS, commented: "The expectation of rates below 6% this spring has disappeared, and buyers and sellers likely will face rates in the mid-6% range into the summer."
Despite these challenges, home shoppers who remain undeterred by fluctuating rates may find certain advantages. Data from Realtor.com indicates that homes for sale increased by 4.6% compared to a year earlier last month, as properties take longer to sell. This softer market has prompted many sellers to adjust their expectations, with list prices falling in April for the sixth consecutive month.
