The average long-term U.S. mortgage rate rose last week to its highest level in a year, another setback for prospective homebuyers hoping for a break from elevated home loan borrowing costs.
The benchmark 30-year fixed rate mortgage rate rose to 6.66% from 6.58%, the Federal Home Loan Mortgage Corporation mortgage buyer, Freddie Mac, said Thursday. One year ago, the average rate was 6.72%.
Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers' purchasing power. As rates rise, that can lead prospective house shoppers to delay buying a house, one reason U.S. house sales have been sluggish this year.
Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose. That average rate increased to 6.04% from 5.96% last week. A year ago, it was at 5.85%, Freddie Mac said.
Mortgage rates are influenced by several factors, from the Federal Reserve's interest rate policy decisions to bond market investors' expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
Rates have been mostly rising this year as the Iran war has driven crude oil prices sharply higher, fueling expectations of hotter inflation. That has pushed up long-term bond yields relative to where they were before the conflict began in late February, causing mortgage rates to trend higher.
The average rate on a 30-year mortgage is now the highest it has been since July 31, 2025, when it was at 6.72%. As recently as late February, the average rate dropped slightly below 6% for the first time since late 2022.
The Federal Reserve on Wednesday left its key interest rate unchanged as it wrestles with how to tame stubbornly high inflation, which has been stuck above the central bank's 2% target for more than five years.
During the central bank's two-day monetary policy meeting, three regional Fed bank presidents dissented in favor of higher rates to combat high prices.