The average rate on a 30-year mortgage remains more than double what it was two years ago, when it was just 2.86%.
The yield has been rising as bond traders react to more reports showing the US economy remains remarkably resilient, which could keep upward pressure on inflation, giving the Federal Reserve reason to keep interest rates higher for longer.“The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb,” said Sam Khater, Freddie Mac’s chief economist.
High inflation drove the Federal Reserve to raise its benchmark interest rate 11 times since March 2022, lifting the fed funds rate to theMortgage 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 US Treasurys and what the Fed does with interest rates can influence rates on home loans.
Those ultra-low rates spurred a wave of home sales and refinancing. The sharply higher rates now are contributing to a dearth of available homes, as homeowners who locked in those lower borrowing costs two years ago are now reluctant to sell and jump into a higher rate on a new property.The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, rose to 6.46% from 6.34% last week. A year ago, it averaged 4.55%, Freddie Mac said.
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