On Thursday, the average long-term mortgage rate in the United States rose for the fourth week in a row, in a setback for Americans looking to potentially buy a home in the traditional homebuying season of spring.
According to ABC News, mortgage buyer Freddie Mac announced that the average rate on a 30-year mortgage rose from 6.90% to 6.94%. Although this is slightly less than the recent high of 6.95% in December, it is still higher than what it was at the same time one year ago, when the average rate was 6.65%.
“The recent boomerang in rates has dampened already tentative homebuyer momentum as we approach the spring, a historically busy season for homebuying,” said Sam Khater, chief economist for Freddie Mac. “While sales of newly built homes are trending in a positive direction, higher rates and elevated prices continue to pose affordability challenges that may leave potential homebuyers on the sidelines.”
Higher mortgage rates can lead to hundreds of dollars more in monthly costs for borrowers, making an already-difficult housing market even more complicated for the average American. At the same time, homeowners are less incentivized to sell their homes now compared to when rates were much lower two or three years ago.
The rate increases are primarily due to inflation, which remains stubbornly high, leading bond investors to worry that the Federal Reserve will not cut interest rates until later this year. Other factors that can influence mortgage rates include future inflation expectations, global demand for U.S. Treasuries, and the Fed’s actions on interest rates.