The average U.S. long-term mortgage rate rose slightly this week but remained near its lowest level in more than three years, according to Freddie Mac.
The benchmark 30-year fixed-rate mortgage rate increased to 6.09% from 6.06% last week, Freddie Mac said Thursday. A year earlier, the rate averaged 6.96%, Freddie Mac said.
Freddie Mac also said borrowing costs on 15-year fixed-rate mortgages, a type commonly used by homeowners refinancing home loans, rose this week. The average rate inched up to 5.44% from 5.38% last week; one year ago, it was 6.16%, Freddie Mac said.
Mortgage rates are influenced by Federal Reserve interest rate policy decisions and by bond market investors’ expectations for the economy and inflation, AP reported. The rates generally track the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans, AP reported.
The modest increase in mortgage rates came after the 10-year Treasury yield jumped. AP reported the bond market reacted to geopolitical tensions over tariff threats by the Trump administration as it pressed for control of Greenland, and also to turbulence in Japan’s bond market.
AP said the 10-year yield was at 4.27% at midday Thursday, up from 4.17% a week earlier.
The housing market has been under pressure for years. AP reported that the sales slump dates back to 2022, when mortgage rates began climbing from pandemic-era lows, and that higher mortgage rates combined with years of rising home prices and a chronic shortage of homes have priced many prospective buyers out. AP said sales of previously occupied U.S. homes remained stuck last year at 30-year lows, and that uncertainty over the economy and job market has kept some would-be buyers on the sidelines.
Still, AP said a pullback in mortgage rates that began late last summer helped boost sales of existing homes toward the end of last year. In December, AP reported, sales jumped 5.1% from the previous month.
As mortgage rates eased, AP reported that more homeowners sought to refinance their existing home loan to a lower rate. The Mortgage Bankers Association said applications for mortgage refinancing loans jumped 20% last week from the previous week, and accounted for nearly 62% of all home loan applications, AP reported. AP also reported that applications for loans to buy a home rose 5%.
Economists generally expect mortgage rates to ease further this year, AP reported. But AP said most recent forecasts show the average rate on a 30-year mortgage remaining above 6%, about twice what it was six years ago.
AP noted that rates would have to drop considerably for homeowners who bought or refinanced when mortgage rates were at rock bottom earlier this decade to take on a new loan at a far higher rate.
Realtor.com data cited by AP showed that nearly 69% of U.S. homes with an outstanding mortgage have a fixed-rate of 5% or lower. AP reported that slightly more than half have a rate at or below 4%.