The average rate on a 30-year fixed-rate mortgage rose to 6.49% this week, up from 6.43% a week ago, according to Freddie Mac.
The increase pushes borrowing costs higher for homebuyers after rates briefly fell to a seven-week low last week.
Economists say rising Treasury yields, inflation concerns and renewed geopolitical tensions have added upward pressure on mortgage rates.
The average rate on a 30-year fixed-rate mortgage climbed to 6.49% this week, reversing last week's modest decline and increasing borrowing costs for prospective homebuyers during the peak summer homebuying season.
Mortgage buyer Freddie Mac reports that the average rate increased from 6.43% last week. A year ago, the benchmark mortgage averaged 6.72%, meaning today's rates remain below year-earlier levels but are still high enough to weigh on affordability. The average rate on a 15-year fixed mortgage, popular with homeowners refinancing, also edged higher to 5.82% from 5.79% the previous week.
"The 30-year fixed-rate mortgage averaged 6.49% this week," Freddie Mac Chief Economist Sam Khater said, noting that mortgage rates have changed little in recent weeks despite ongoing economic uncertainty.
Mortgage rates generally track movements in the 10-year Treasury yield, which has risen amid renewed inflation concerns and geopolitical uncertainty. Analysts point to higher oil prices and investor concerns surrounding the renewed conflict involving Iran as factors pushing long-term bond yields higher, which in turn increases mortgage borrowing costs.
Affordability challenges
The latest increase comes as the housing market continues to struggle with affordability challenges. Elevated mortgage rates, combined with still-high home prices, have limited purchasing power for many would-be buyers and contributed to sluggish home sales.
Existing-home sales fell 2.4% in June, according to the National Association of Realtors, underscoring the ongoing weakness in the market. Economists have repeatedly noted that even relatively small changes in mortgage rates can significantly affect monthly payments and buyer demand.
For buyers, the difference between last week's 6.43% rate and this week's 6.49% may appear modest, but over the life of a typical 30-year mortgage, even a small increase can add thousands of dollars in interest costs.
Many housing economists still expect mortgage rates to remain in the mid-6% range for much of the year unless inflation eases more quickly or the bond market rallies. Until then, affordability is likely to remain one of the biggest obstacles facing the housing market.