Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 6.96% from 6.81% last week. A year ago, the rate averaged 5.51%.
The latest increase in rates follows a recent sharp upward move in the 10-year Treasury yield, which climbed above 4% last week for the first time since early March. The yield, which lenders used to price rates on mortgages and other loans, was down to 3.80% in midday trading Thursday following new data pointing to cooler inflation, which led bond traders to trim bets for more rate hikes by the Federal Reserve later this year.
High inflation has driven the Federal Reserve to jack up interest rates at a blistering pace. Beginning with its first hike in March 2022, the central bank has lifted its benchmark interest rate to about 5.1%, its highest level in 16 years, before forgoing a hike at its meeting of policymakers last month.
The average rate on a 30-year mortgage remains more than double what it was two years ago, when ultra-low rates spurred a wave of home sales and refinancing. The far higher rates now are contributing to the low level of available homes by discouraging homeowners who locked in those lower borrowing costs two years ago from selling.. Last month, sales of previously occupied U.S. homes were down 20.