US Mortgage Rate Rises to 9-Month High

The average rate on a 30-year fixed-mortgage inched higher by 2bps from the previous week to 6.53% on the last week of May, according to data compiled by Freddie Mac. It was the highest level in nine months. The jump took place despite the pullback in long-term Treasury yields over the period as signs of progress between the US and Iran in their conflict trimmed soaring inflation concerns, although benchmark borrowing costs remained high.

The average rate on a 30-year fixed-mortgage rose by 15bps from the previous week to 6.51% as of May 21st, the highest in nine months, according to data compiled by Freddie Mac. The jump was aligned with the increase in long-term Treasury yields over the period, as soaring energy prices and robust labor market data raised expectations of a potential rate hike by the Federal Reserve. The yield on the 30-year Treasury bond, closely related to MBS of the same maturity, rose to its highest since 2007. “As rates fluctuate, aspiring buyers should remember that by shopping around for the best mortgage rate and getting multiple quotes, they can potentially save thousands." said Sam Khater, Freddie Mac’s Chief Economist.

The average rate on a 30-year fixed-mortgage was at 6.36% as of May 14th, one basis point below the one-month high in the previous week to hold most of the rebound since the start of the year. Mortgage rates tracked the increase in long-dated Treasury yields during the period as a surge in energy prices placed inflationary risks on the upside, potentially warranting a hawkish Federal Reserve. “While purchase demand is softening, it remains above this time last year. Recent data also shows existing-home sales modestly edging up.” said Sam Khater, Freddie Mac’s Chief Economist.