LOS ANGELES – Mortgage borrowing costs rose again this week, pushing the average long-term mortgage rate in the United States to its highest level in nearly 23 years, another blow to future homebuyers facing a tough market. increasingly unaffordable real estate.
The average rate for the benchmark 30-year mortgage loan rose to 7.31 percent, from 7.19 percent last week, mortgage buyer Freddie Mac said Thursday. A year ago, the average rate was 6.70 percent.
Borrowing costs for 15-year fixed-rate mortgages, popular among homeowners refinancing their home loans, also rose. The average index rose to 6.72 percent from 6.54 percent last week. A year ago, the average was 5.96 percent, according to Freddie Mac.
“The 30-year fixed-rate mortgage has reached the highest level since 2000,” said Sam Khater, chief economist at Freddie Mac. “However, unlike at the turn of the millennium, home prices are rising.” today at the same time as mortgage rates, mainly due to low inventory. These headwinds are causing both buyers and sellers to hold on while waiting for better circumstances.”
High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already out of reach for many Americans. They also discourage homeowners who got rock-bottom interest rates two years ago from selling. The average rate on a 30-year mortgage is now more than double what it was two years ago, when it was just 3.01 percent.
The combination of high rates and low housing inventory has exacerbated the affordability crisis by keeping home prices near record highs even as U.S. occupied home sales have fallen 21 percent in the first eight months of this year compared to the same period in 2022.
This is the third week in a row that mortgage rates have risen. The weekly average rate for a 30-year mortgage has remained above seven percent since mid-August and is now at the highest level since mid-December 2000, when it averaged 7.42 percent.
Mortgage rates have been rising along with the 10-year Treasury yield, which lenders use as a guide to price loans. Yields have soared in recent weeks on concerns that the Federal Reserve will keep short-term interest rates higher for longer to fight inflation.
The central bank has already set its main interest rate at the highest level since 2001 in hopes of extinguishing high inflation, and last week indicated it may cut rates less than expected next year.
The threat of higher rates for longer has pushed Treasury yields to levels not seen in more than a decade. The 10-year Treasury yield stood at 4.61 percent as of midday Wednesday. In May it was around 3.50 percent and at the beginning of the pandemic it was only 0.50 percent.
Although mortgage rates don’t necessarily reflect Federal Reserve rate increases, they tend to follow the yield on the 10-year Treasury bond. Investor expectations about future inflation, global demand for U.S. Treasuries and what the Federal Reserve does with interest rates can influence home loan rates.
2023-09-28 23:27:54
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