The average rate on the benchmark 30-year fixed-rate mortgage rose for a second consecutive week, reflecting higher Treasury yields as global investors continued to weigh geopolitical risks stemming from the recent Iran conflict and the outlook for U.S. monetary policy.
According to Freddie Mac’s latest Primary Mortgage Market Survey, the average 30-year fixed-rate mortgage increased to 6.58% for the week ending July 23 from 6.55% a week earlier. Despite the modest increase, borrowing costs remain below the 6.74% average recorded during the same week last year.
The average 15-year fixed-rate mortgage, a common choice for refinancing and shorter-term financing, also moved higher to 5.96%.
“The 30-year fixed-rate mortgage averaged 6.58% this week,” said Sam Khater, Freddie Mac’s chief economist. “As market conditions continue to evolve, borrowers should remember that shopping around for a mortgage rate can make a meaningful difference, potentially saving them thousands over the loan’s lifetime.”
Mortgage rates generally track movements in the yield on the benchmark 10-year U.S. Treasury note, which has remained elevated amid shifting investor sentiment. Following the military conflict involving Iran earlier this summer, Treasury yields initially fell as investors sought the safety of U.S. government bonds. However, as immediate fears of a broader regional conflict eased, yields rebounded as markets refocused on persistent inflation pressures, strong economic data, expanding federal deficits, and expectations that the Federal Reserve may keep interest rates higher for longer.
Those higher Treasury yields have translated into increased borrowing costs across mortgage markets, adding another headwind for prospective homebuyers already grappling with elevated home prices and limited housing inventory.
Although mortgage rates remain below year-ago levels, affordability continues to be a significant constraint on housing demand. Higher financing costs reduce purchasing power, increase monthly mortgage payments, and discourage both first-time buyers and existing homeowners from entering the market.
Freddie Mac’s weekly survey, widely viewed as the industry’s benchmark for residential mortgage financing, measures rates offered to well-qualified borrowers. Actual borrowing costs vary depending on credit scores, loan size, down payment, and lender pricing.
Housing economists continue to encourage borrowers to obtain quotes from multiple lenders, noting that even modest differences in mortgage rates can translate into substantial savings over the life of a home loan.
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