AP Business Writer Alex Veiga
The average US mortgage rate for 30 years has risen to its highest level since mid-February this week.
Mortgage buyer Freddie Mac said Thursday that the rate rose to 6.86% from 6.81% last week. A year ago, the price averaged 6.94%.
The borrowing costs for 15-year fixed-rate mortgages, which are popular for homeowners to refinance their mortgage, have also risen. The average rate reached up to 6.01%, up to 5.92% last week. It’s down from 6.24% a year ago, Freddie Mac said.
Mortgage rates are affected by several factors, including the global demand of the US Treasury, the Federal Reserve’s interest rate policy decisions, and bond market investors’ expectations regarding the economy and inflation.
The average 30-year mortgage rate has remained relatively high so far, just above 7% so far, set in mid-January. The previous low average rate point has dropped for a short time to 6.62% five weeks ago. Currently, it is at its highest level since February 13th, with an average of 6.87%.
The rise in mortgage fees that allow borrowers to add hundreds of dollars a month has discouraged home shoppers and has caused the spring home buying season to start badly despite a sharp rise in inventory on the market since last year. Sales of previously occupied US homes fell to the slowest pace last month in April, dating back to 2009.
The recent rise in mortgage rates reflects a decade-long Treasury yield movement, which lenders use as a guide to mortgages for pricing.
Yields, which fell primarily after rising to around 4.8% in mid-January, began to rise in March amidst investors’ unrest over the Trump administration’s trade war. It rose again last week after the US and China agreed to a 90-day ceasefire in a trade dispute, raising expectations that the Federal Reserve will not need to cut interest rates as expected this year to protect the economy from tariff damages.
Long-term bond yields have surged again this week after Moody lowered the US credit rating over concerns that it would inflate federal debt.
The 10-year Treasury yield was 4.56% in a noon transaction Thursday, after the House approved a bill that could cut taxes and add trillions of dollars to U.S. debt.
“This upward pressure has led to an increase in borrowing costs for home buyers, as mortgage rates closely track 10-year yields,” he said. “This means an increase in mortgage rates.”
The rise in mortgage fees is dissuading some home buyers during the traditional busiest period for home sales. Mortgage applications fell 5.1% from a week ago, according to the Mortgage Bankers Association.
Applications for loans to buy homes had increased by 13% from the previous year.
Economists expect mortgage rates to remain volatile in the coming months, hoping to keep the average mortgage rate for 30 years between 6% and 7% this year.
Original issue: May 22, 2025 12:14pm EDT
