LOS ANGELES (AP) — The average long-term U.S. mortgage rate slipped after climbing for five consecutive weeks to a more than 20-year high, a modest relief for would-be buyers challenged by rising prices and a thin inventory of homes on the market.
Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan fell to 7.18% from 7.23% last week. A year ago, the rate averaged 5.66%.
The average rate is now the lowest it’s been in two weeks, but remains above 7%. High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already unaffordable to many Americans. They also discourage homeowners who locked in low rates two years ago from selling.
The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, was 6.55%, unchanged from last week. A year ago, it averaged 4.98%, Freddie Mac said.
Mortgage rates climbed for much of August along with the 10-year Treasury yield, which is used by lenders to price rates on mortgages and other loans.
The yield, which last week neared its highest level since 2007, rose sharply as bond traders reacted to reports showing the U.S. economy remains remarkably resilient. That’s stoked worries that the Federal Reserve will conclude that it needs to keep interest rates higher for longer in order to crush inflation.
The average rate on a 30-year mortgage remains more than double what it was two years ago, when it was just 2.87%. Those ultra-low rates spurred a wave of home sales and refinancing. The sharply higher rates now are contributing to a dearth of available homes, as homeowners who locked in those lower borrowing costs two years ago are now reluctant to sell and jump into a higher rate on a new property.
The lack of housing supply is also weighing on sales of previously occupied U.S. homes, which are down 22.3% through the first seven months of the year versus the same stretch in 2022.
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