World News | Average US long-term mortgage rate climbs to 6.79% this week, highest since November

LOS ANGELES, June 1 (AP) Average long-term U.S. mortgage rates climbed this week to their highest level since November, pushing up borrowing costs for would-be homebuyers at a time when the housing market is hampered by near-record levels — Inventory of homes on the market is low.

Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 6.79% from 6.57% last week. A year ago, the rate averaged 5.09%.

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The latest hike, marking the third in three weeks, lifted the average rate on a 30-year home loan to its highest level since surging to 7.08% in early November.

The average rate on a 15-year fixed-rate mortgage popular with home refinancers rose to 6.18% this week from 5.97% last week. A year ago, it averaged 4.32%, Freddie Mac said.

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High interest rates add hundreds of dollars a month to homebuyers’ costs, limiting their affordability in a market that remains unaffordable after years of soaring home prices and historically low housing inventory.

Mortgage rates moved higher along with the 10-year U.S. Treasury yield, which lenders use as a guide for pricing loans. The yield touched 3.81% last week, the highest since early March, reflecting uncertainty among bond investors about the federal government’s ability to avoid a default on its debt and renewed concerns that the Federal Reserve may not stop raising interest rates .

“Mortgage rates surged this week as a buoyant economy prompted markets to price in the possibility of another Fed rate hike,” said Sam Khater, chief economist at Freddie Mac. There is steady buying demand in the low interest rate range, but that demand is likely to wane as rates approach 7 per cent.”

The House of Representatives on Wednesday approved a deal to prevent a possible default on U.S. government debt. But uncertainty about what the Fed will do at its upcoming interest-rate policy meeting this month and beyond could rattle bond markets, exacerbating volatility in mortgage rates.

Investor expectations for future inflation, global demand for U.S. Treasuries and the Federal Reserve’s influence on interest rates all affect home loan rates.

The Federal Reserve raised the benchmark interest rate 10 times in 14 months to reduce stubbornly high inflation. Federal Reserve Chairman Jerome Powell and other central bankers have said recently that the central bank may forego another rate hike at this month’s meeting of policymakers. The move will give the Fed time to assess the economic impact of its previous rate hikes.

Still, a pause now doesn’t mean the Fed can’t resume raising rates later this year. Other Fed officials continued to voice support for further rate hikes given that inflation remains stubbornly high. The consumer price index, which tracks consumer-level inflation, rose 4.9 percent in April from 12 months earlier.

The U.S. housing market has been slow to regain its footing this year, with rising mortgage rates and a lack of inventory on the market limiting sales. As a result, loans to buy homes fell 44.3% in the first quarter compared with a year earlier, according to an analysis released Thursday by real estate data firm Attom.

Higher interest rates have significantly reduced demand for mortgage refinance loans, which fell 72.5% in the first quarter from a year earlier, Attom said. (Associated Press)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)