The average rate on a 30-year fixed mortgage rose to 6.32% on Thursday from 6.12% last week, according to mortgage buyer Freddie Mac. A year ago, the average rate was 3.92%.
The 15-year fixed-rate mortgage averaged 5.51%, up from last week when it averaged 5.25%. A year ago at this time, the 15-year FRM averaged 3.15%.
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“Mortgage rates moved up for the second consecutive week,” said Sam Khater, Freddie Mac’s Chief Economist. “The economy is showing signs of resilience, mainly due to consumer spending, and rates are increasing. Overall housing costs are also increasing and therefore impacting inflation, which continues to persist.”
The consumer price index (CPI) rose 6.4% in January on an annual basis, hotter than expected, but remained steady compared to last month.
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The latest read presents more challenges for Federal Reserve Chair Jerome Powell who has hinted that disinflation is underway.
The Federal Reserve’s rate-setting committee next meets in March.
At its first meeting of 2023 earlier this month, the Fed raised its benchmark lending rate by another 25 basis points, its eighth increase in less than a year. That pushed the central bank’s key rate to a range of 4.5% to 4.75%, its highest level in 15 years.
Though those rate hikes do impact borrowing rates across the board for businesses and families, rates on 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates can also influence the cost of borrowing for a home.
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The average long-term rate reached a two-decade high of 7.08% in the fall as the Federal Reserve continued to raise its key lending rate in a bid to cool the economy and bring down stubborn, four-decade-high inflation.
Additional reporting from Breck Dumas and the Associated Press.