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Borrowing costs on 15-year fixed-rate mortgages, popular with
homeowners refinancing their home loans, also rose. The average
rate ticked up to 5.92% from 5.89% last week. It’s down from
6.28% a year ago, Freddie Mac said.
Mortgage rates are influenced by several factors, including
global demand for U.S. Treasurys, the Federal Reserve’s interest
rate policy decisions and bond market investors’ expectations
about the economy and inflation.
The average rate on a 30-year mortgage has remained relatively
close to its high so far this year of just above 7%, which it
set in mid-January. The average rate’s low point so far was five
weeks ago, when it briefly dropped to 6.62%.
The elevated mortgage rates, which can add hundreds of dollars a
month in costs for borrowers, have discouraged home shoppers,
leading to a lackluster start to the spring homebuying season,
even as the inventory of homes on the market is up sharply from
last year. Sales of previously occupied U.S. homes fell in
March, posting the largest monthly drop since November 2022.
The recent swings in mortgage rates reflect volatility in the
10-year Treasury yield, which lenders use as a guide to pricing
home loans.
The yield, which had mostly fallen this after climbing to around
4.8% in mid-January, surged last month to 4.5% amid a sell-off
of government bonds, triggered by investor anxiety over the
Trump administration’s trade war.
The yield eased in the weeks since, but climbed above 4.5%
earlier this week after the U.S. and China agreed to a 90-day
truce in their trade dispute. That raised expectations that the
Federal Reserve won’t have to cut interest rates as deeply as
expected this year in order to shield the economy from the
damage of tariffs.
The 10-year Treasury yield was at 4.45% in midday trading
Thursday.
Economists expect mortgage rates to remain volatile in coming
months, though they generally call for the average rate on a
30-year mortgage to remain above 6.5% this year.
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