Mortgage rates held steady this week, keeping the average long-term U.S. home loan rate at its highest level in nearly three years.<\/p>\n
The benchmark 30-year fixed-rate mortgage was unchanged from last week at 7.40%, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.27%.<\/p>\n
The latest reading ends a seven-week climb for the average rate, which is at the highest level since Nov. 16, 2023, when it was at 7.44%.<\/p>\n
Meanwhile, borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, eased this week. That average rate dropped to 6.71% from 6.73% last week. A year ago, it was at 5.52%.<\/p>\n
Rates on home loans are influenced by inflation, Federal Reserve policy and bond-market investors\u2019 expectations for the economy, among other factors. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.<\/p>\n
Mortgage rates have been climbing since late February, when the U.S. war with Iran began<\/a>, pushing up the price of oil<\/a> and driving inflation higher<\/a>. The run-up in rates also reflects heightened bond market<\/a> volatility, which has pushed up yields on U.S. Treasurys.<\/p>\n U.S. home sales remain stalled this year<\/a> in large part because of rising mortgage rates, which can add hundreds of dollars a month in costs for borrowers, limiting homebuyers\u2019 purchasing power and prompting many to put off buying a home.<\/p>\n The recent string of mortgage rate increases snapped as the 10-year Treasury yield pulled back from its highest level since 2002.<\/p>\n The yield was at 5.10% at midday Thursday on the bond market. It had topped 5.30% earlier this month amid worries about high inflation, signals of a strong U.S. economy and other factors. It\u2019s still well above its 3.97% level from before the war with Iran began.<\/p>\n In late February, the average rate on a 30-year mortgage briefly dipped to 5.98%, its lowest level going back to late 2022. The 1.42 percentage point increase in the rate since then translates roughly into an additional monthly cost of $376 for a borrower financing a $400,000 home loan at the current average rate.<\/p>\n Depending on a borrower\u2019s income, credit and other factors, they may qualify for a rate on a 30-year mortgage that is below or above the current average.<\/p>\n The U.S. housing market has been in a slump<\/a> since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes were essentially flat last year, stuck at a 30-year low.<\/a><\/p>\n This week, the National Association of Realtors said that existing U.S. home sales<\/a> rose in September from the previous month, but slowed compared to a year earlier amid rising mortgage rates and home prices.<\/p>\n The surge in mortgage rates in recent weeks has put off many would-be homebuyers.<\/p>\n Mortgage applications, which include loans to buy a home or refinance an existing mortgage, fell 2.7% last week from the previous week as mortgage rates rose, according to the Mortgage Bankers Association.<\/p>\n Faced with higher borrowing costs due to rising mortgage rates, more homebuyers are opting for adjustable-rate mortgages, or ARMs. Such loans, which typically offer lower initial interest rates than traditional 30-year, fixed-rate mortgages, accounted for 10.5% of all mortgage applications last week \u2014 the highest level in a year, MBA said.<\/p>\n Despite holding steady this week, it’s likely that the recent upward march in mortgage rates is not over.<\/p>\n Reports this week showing prices at the consumer<\/a> and wholesale level<\/a> rose more than economists expected flashed the latest sign that inflation has worsened as rising oil prices add on costs to all manner of goods and services.<\/p>\n