The average long-term U.S. mortgage rate drew closer this week to 6.5%, pushing up borrowing costs for prospective homebuyers.
The benchmark 30-year fixed rate mortgage rate rose to 6.49% from 6.43% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.72%.
When mortgage rates rise they can add hundreds of dollars a month in costs for borrowers, reducing their purchasing power.
Mortgage rates have remained elevated
after the average rate on a 30-year loan briefly dropped below 6% in February, then climbed in May to its highest level in nine months. The uptick in mortgage rates has weighed on home sales this year.
Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose this week. That average rate increased to 5.82% from 5.79% last week. A year ago, it was at 5.86%, Freddie Mac said.
Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ 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.
