Mortgage rates in the US rise to highest level since mid-march

Mortgage rates in the US rise to highest level since mid-march

May 26, 2023

(BLOOMBERG) US mortgage rates rose to the highest level since mid-March.

The average for a 30-year, fixed loan was 6.57 per cent, up from 6.39 per cent last week, Freddie Mac said in a statement on Thursday (May 25). Rates followed a jump in yields for government bonds as investors monitored the standoff in federal debt-limit negotiations.

Borrowing costs have crept closer to the highs reached late last year, adding to burdens for buyers stretching to find affordable homes among a scarce inventory of resale listings. With current owners reluctant to move and trade up from their historically low mortgage rates, new construction is making up an increasing share of transactions.

“Dampened affordability remains an issue for interested homebuyers, and homeowners seem unwilling to lose their low rate and put their home on the market,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “If this predicament continues to limit supply, it could open up an opportunity for builders to help address the country’s housing shortage.”

Federal Reserve policymakers are leaning towards pausing interest-rate hikes in June but signalled they’re not yet ready to end their campaign against inflation, according to minutes from this month’s meeting. Investor speculation over the Fed’s next moves and the debt impasse may send mortgage rates fluctuating in the coming weeks.