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Mortgage rates jumped this week to the highest level in nearly four months, mortgage buyer Freddie Mac said Thursday.
Freddie Mac’s latest Primary Mortgage Market Survey, released Thursday, showed the average rate on the benchmark 30-year fixed mortgage rose to 6.22% from last week’s reading of 6.11%.
The average rate on a 30-year loan was 6.67% a year ago.
“The 30-year fixed-rate mortgage edged up this week to 6.22% but remains nearly half a percentage point lower than the same time last year,” said Sam Khater, Freddie Mac’s chief economist. “Potential homebuyers are poised for a more affordable spring homebuying season than last with the market experiencing improvements in purchase applications and pending home sales.”
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The average rate on a 15-year fixed mortgage rose to 5.54% from last week’s reading of 5.5%.
Mortgage rates are affected by several factors, including the Federal Reserve and geopolitics.
“Rising energy prices and renewed trade uncertainty have lifted inflation expectations, putting upward pressure on longer-term interest rates and, in turn, mortgage rates,” said Realtor.com senior economist Anthony Smith. “This comes despite softer recent economic data, including moderating inflation at 2.4% and weaker February job growth, which would typically support lower borrowing costs.”
Fed policymakers voted to leave the benchmark federal funds rate unchanged at its current range of 3.5% to 3.75% on Wednesday. The move follows the central bank’s decision to hold rates steady in January after three successive 25-basis-point rate cuts in September, October and December to close out last year.
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Economic data showing a slowdown in the labor market, inflation continuing to run hotter than the Fed’s 2% target and the unrest in Iran prompted policymakers to continue to pause rate cuts.
Fed Chairman Jerome Powell said the current 3.5% to 3.75% range for the benchmark federal funds rate is within a range of neutral. He added that it’s too soon to tell what the effect of the conflict in the Middle East will be on the economy, adding that policymakers will continue to monitor economic data as they consider adjusting monetary policy.
Though mortgage rates are not directly affected by the Fed’s interest rate decisions, they closely track the 10-year Treasury yield. The 10-year yield hovered around 4.27% as of Thursday afternoon.
