FILE – A sign is posted in front of a home for sale on August 07, 2024 in San Rafael, California. (Photo by Justin Sullivan/Getty Images)
The average rate on a 30-year mortgage stood at 6.76% for the second week in a row.
The rate is not as high as the highest levels the U.S. has seen this year and it’s below the average rate a year ago.
What does this mean?
Dig deeper:
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, eased. The average rate dropped to 5.89% from 5.92% last week. It’s down from 6.38% a year ago, mortgage buyer 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.
What influences the rate?
Big picture view:
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 after climbing to around 4.8% in mid-January, surged last month to 4.5% amid a sell-off in government bonds triggered by investor anxiety over the Trump administration’s trade war.
The 10-year Treasury yield was at 4.33% in midday trading Thursday, up from 4.26% late Wednesday.
On Wednesday, the Federal Reserve left its main interest alone, as was widely expected, even as it noted an increased risk of higher unemployment and inflation. While the Fed doesn’t set rates on home loans, its actions can influence the trajectory of mortgage rates.
What they’re saying:
“Looking ahead, the Fed’s wait-and-see approach is likely to keep mortgage rates at a high-6% in the near term, unless major policy developments or economic shifts occur, such as notable outcomes from the upcoming U.S.-China trade talks scheduled for this weekend,” said Jiayi Xu, economist at Realtor.com.
Buying a home
Elevated mortgage rates and rising home prices are the key reasons why the spring homebuying season is off to a lackluster start, despite the inventory of homes on the market increasing sharply from last year.
Sales of previously occupied U.S. homes fell in March, posting the largest monthly drop since November 2022.
The median monthly housing payment was $2,868 in the four weeks ending May 4, an all-time high, according to a new report from Redfin.
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.
The Source: Information for this article was gathered from The Associated Press. This story was reported from Los Angeles.
