US Long-Term Mortgage Rates Edge Up, Hover in Mid-6% Range
The average long-term U.S. mortgage rate inched higher this week, reflecting a recent rise in the 10-year Treasury yield. According to Freddie Mac, the average rate on a 30-year mortgage rose to 6.64% from 6.63% last week, marking an increase from the previous year’s rate of 6.12%. Freddie Mac’s chief economist, Sam Khater, noted that mortgage rates have remained relatively stagnant, hovering in the mid-6% range over the past few weeks.
This movement mirrors an uptick in the 10-year Treasury yield, which serves as a benchmark for loan pricing. Bond traders reacted to January’s robust jobs report by driving the yield above 4%, fueling concerns that the Federal Reserve may delay interest rate cuts. Expectations of rate cuts, driven partly by declining inflation since its peak two summers ago, have contributed to the retreat in the 10-year Treasury yield since October, when it reached its highest level since 2007.
In a recent interview, Federal Reserve Chair Jerome Powell reaffirmed the central bank’s intention to implement three interest rate cuts this year, possibly commencing as early as May. Investor sentiment regarding future inflation, global demand for U.S. Treasurys, and the Fed’s monetary policy decisions can all influence home loan rates.
Despite the rise in mortgage rates, the cost of refinancing eased slightly this week. The average rate on 15-year fixed-rate mortgages, favored by homeowners seeking to refinance, decreased to 5.90% from 5.94% the previous week, according to Freddie Mac. However, the cost of financing a home has generally declined since late October, when the average 30-year mortgage rate reached 7.79%, the highest level since late 2000.
While the decline in rates has provided some relief by lowering monthly mortgage payments, challenges persist in the housing market due to elevated rates and a shortage of available homes. Sales of previously owned U.S. homes plummeted to nearly a 30-year low last year, dropping 18.7% from 2022. Despite projections of further rate decreases throughout the year, economists caution that the competitive market and rising prices may continue to pose challenges for prospective homebuyers. Lisa Sturtevant, chief economist at Bright MLS, emphasized that while lower rates may be anticipated in 2024, buying a home later in the year may not necessarily translate to easier access to the market, as prices continue to rise and inventory remains constrained.