Average 30-year US mortgage rate rises to highest level in a year at 6.66%

The housing market faces another hurdle as the average 30-year fixed mortgage rate climbed to 6.66% this week. This marks the fourth straight week of increases for borrowing costs, bringing them to their highest level in a full year.

Freddie Mac reported that rising interest rates continue to pressure prospective buyers. These higher costs add significant monthly expenses for homeowners, which reduces overall purchasing power for those currently in the market. Consequently, many shoppers are choosing to pause their plans until conditions stabilize.

Market movement is closely tied to the 10-year Treasury yield, which lenders use to price home loans. Increased tensions related to the Iran war have contributed to higher crude oil prices and inflation expectations, putting upward pressure on bond yields. The 10-year Treasury yield sits at 4.66% as of Thursday, a significant jump from late February levels.

Recent data from the Federal Reserve further complicates the picture. With policymakers holding rates steady and some officials signaling a preference for future hikes, immediate relief for mortgage borrowers appears unlikely. Mortgage applications dropped 6.4% last week as potential buyers reacted to the rising trend.

Sales of previously occupied homes remain near 4 million on an annual basis, well below historical norms. As the industry navigates this environment, the combination of stubborn inflation and elevated borrowing costs keeps the national housing market in a prolonged slump.