The average 30-year fixed mortgage rate rose to 6.69% from 6.66% last week.
The 15-year rate slipped to 6.01%, down from 6.04%.
Improving inventory and softer listing prices may help buyers, but borrowing costs remain a major affordability barrier.
The average rate on the most popular U.S. home loan edged higher this week, prolonging an affordability squeeze for prospective buyers even as parts of the housing market show signs of shifting in their favor.
The average rate on a 30-year fixed-rate mortgage increased to 6.69% from 6.66% a week earlier, Freddie Mac said Thursday. The rate averaged 6.63% at the same time last year.
Meanwhile, the average 15-year fixed mortgage rate declined to 6.01% from 6.04% last week. It stood at 5.75% a year ago, according to Freddie Mac’s Mortgage Market Survey.
The weekly increase in the 30-year rate amounts to only three basis points and has a limited effect on an individual loan. For example, principal and interest on a $400,000 mortgage at 6.69% would be about $2,580 a month, roughly $8 more than at last week’s rate. The calculation excludes property taxes, homeowners insurance and other costs.
The larger affordability problem is that rates have remained elevated while home prices are still high. The same $400,000 loan would carry a monthly payment nearly $900 lower at a 3% rate, illustrating how sharply buyers’ purchasing power has deteriorated since the era of ultralow borrowing costs.
Higher rates can also reduce the number of homes entering the market because owners who secured cheaper mortgages may be reluctant to sell and take out a new loan at today’s rates. For buyers, that combination of costly financing and constrained supply can make it difficult to find a home that fits both their needs and their budget.
Tentative signs of relief
There are tentative signs of relief. Freddie Mac Chief Economist Sam Khater said listing prices are modestly below their levels of a year ago and the inventory of homes for sale is improving after years of limited supply. Those changes could give buyers greater negotiating leverage, including opportunities to seek price reductions or seller assistance with closing costs.
However, a small decline in a home’s asking price may not fully offset mortgage rates near 7%. Buyers must also account for insurance premiums, property taxes, maintenance expenses and, in some cases, homeowners-association fees.
Freddie Mac’s survey reflects conventional mortgage applications submitted by thousands of lenders nationwide, with rates offered from the prior Thursday through Wednesday. Individual borrowers may receive substantially different offers based on their credit, down payment, loan type and lender.