The average rate on a 30-year mortgage in the U.S. edged higher this week, ending a seven-week slide that helped ease borrowing costs for home shoppers leading into the spring homebuying season.
The rate averaged 6.65% this week, up from 6.63% last week, mortgage buyer Freddie Mac said Thursday. A year ago, it averaged 6.74%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also ticked up this week. The average rate rose to 5.8% from 5.79% last week. A year ago, it averaged 6.16%, Freddie Mac said.
Mortgage rates are influenced by several factors, including bond market investors’ expectations for future inflation, global demand for U.S. Treasurys and the Federal Reserve’s interest rate policy decisions.
After climbing to just above 7% in mid-January, the average rate on a 30-year mortgage declined through last week, echoing moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
The yield, which was approaching 4.8% in mid-January, has been mostly falling since then, reflecting worries about the economy’s growth and the fallout from the Trump administration’s decision to impose tariffs on imported goods from many of the nation’s key trade partners. The yield was at 4.31% in midday trading Thursday.
Tariffs can drive inflation higher, which could translate into higher yields on the 10-year Treasury note, pushing up mortgage rates. That’s because bond investors demand higher returns as long as inflation remains elevated.
On Thursday, the Labor Department said that U.S. wholesale inflation last month was milder than economists expected. That followed a similarly encouraging report from the day before showing inflation at the consumer level slowed in February for the first time since September.
Still, the Fed, which is scheduled to give its latest interest rate policy update next Wednesday, has signaled that it intends to take a more cautious approach as it gauges where inflation is headed and what impact the Trump administration’s policies on trade, taxes and other fronts will have on the economy.
So far, the pullback in rates hasn’t improved the affordability equation for many would-be homebuyers, keeping the housing market in a sales slump.
Still, as rates have eased in recent weeks, more would-be homebuyers have been applying for a home loan.
Last week, mortgage applications jumped 11.2% from the previous week and 31% compared to a year earlier, according to the Mortgage Bankers Association.
