The average rate for a long-term mortgage in the United States rose again this week, which is terrible news for anybody in the country hoping to buy a new home or make significant improvements to an existing one.
This week, the average 30-year mortgage rate was 6.90%, up from 6.81% last week. This time last year, the average home loan rate was 4.99%, as mortgage investor Freddie Mac reported on Thursday.
Refinancing homeowners will see a rise in the rate on 15-year fixed-rate mortgages from the previous week’s 6.11% to 6.25%. A year ago, the rate was 4.26%.
Increases in monthly payments of several hundred dollars for borrowers due to high-interest rates limit their access to a housing market already out of reach for many Americans.
The Federal Reserve has raised its benchmark interest rate eleven times since March 2022 due to rising prices. The current Fed Funds rate is the highest in almost two decades.
Consistent drops in inflation since the summer of 2017 have led many onlookers to believe the Federal Reserve is finished raising interest rates.
Instead of constantly following the Fed’s rate rises, mortgage rates tend to track the yield on the 10-year Treasury note. Investors’ inflationary outlooks, global demand for U.S. Treasuries, and Federal Reserve interest rate policy are just a few of the potential influences on mortgage rates.
When record-low interest rates prompted a housing market boom two years ago, the average rate on a 30-year mortgage was far lower than it is now. However, the current rate is more than double the historical average. One cause of the housing crisis is the much higher rates currently in force. To avoid paying higher interest rates on their following properties, homeowners who were able to lock in lower borrowing costs two years ago are unwilling to sell their houses.