LOS ANGELES — Mortgage rates inched higher this week, keeping the average rate on a 30-year mortgage essentially flat and near the 7% range it’s been in most of this year. The rate rose to 6.78% from 6.77% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.81%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also edged up this week, pushing the average rate up to 6.07% from 6.05% last week. A year ago, it averaged 6.11%, Freddie Mac said.
“Mortgage rates essentially remained flat from last week but have decreased nearly half a percent from their peak earlier this year,” said Sam Khater, Freddie Mac’s chief economist. “Despite these lower rates, buyers continue to pause, as reflected in tumbling new and existing home sales data.”
After jumping to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage has mostly hovered around 7% this year — more than double what it was just three years ago.
The elevated mortgage rates, which can add hundreds of dollars a month in costs for borrowers, have discouraged home shoppers, extending the nation’s housing slump into its third year. Sales of previously occupied U.S. homes fell in June for the fourth month in a row. And sales of new single-family homes fell last month to the slowest annual pace since November.
Mortgage rates are influenced by several factors, including how the bond market reacts to the central bank’s interest rate policy decisions. That can move the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Recent signs of cooling inflation have raised expectations that the Federal Reserve will cut its benchmark rate in September. If bond yields decline in anticipation of a Fed rate cut, that could lead mortgage rates to ease.
Still, most economists expect the average rate on a 30-year home loan to remain above 6% this year.
Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
