The average rate on a 30-year fixed mortgage climbed to 6.66% this week, marking the fourth straight weekly increase and the highest level in a year.
The 15-year fixed-rate mortgage also moved higher, rising to 6.04% from 5.96% last week.
Freddie Mac says rising inventory is giving buyers more choices, even as higher borrowing costs continue to challenge affordability.
Mortgage rates continued their upward march this week, reaching their highest level in a year and adding another obstacle for homebuyers already grappling with elevated home prices.
Freddie Mac's latest Primary Mortgage Market Survey found that the average rate on a 30-year fixed-rate mortgage rose to 6.66% for the week ending July 30, up from 6.58% a week earlier. A year ago, the average rate was 6.72%.
The average rate on a 15-year fixed-rate mortgage increased to 6.04%, compared with 5.96% last week. One year ago, it averaged 5.85%.
"The housing market continues to benefit from more available inventory, providing prospective homebuyers with additional options and helping support buyer activity as mortgage rates fluctuate," said Sam Khater, Freddie Mac's chief economist.
Affordability remains under pressure
While rates remain slightly below where they were a year ago, the latest increase marks the fourth consecutive weekly gain and pushes borrowing costs to their highest point in 12 months. The higher rates translate into larger monthly mortgage payments, reducing the purchasing power of buyers who are already facing historically high home prices.
Mortgage rates are influenced more by movements in the 10-year Treasury yield than by the Federal Reserve's benchmark interest rate. Treasury yields have climbed in recent weeks as investors have grown increasingly concerned about persistent inflation and broader economic uncertainty, putting upward pressure on home loan rates.
More homes on the market
Despite higher financing costs, housing inventory has been improving in many markets after years of tight supply. The increase in available homes is giving shoppers more options and reducing some of the intense competition that characterized the housing market during the pandemic.
Still, economists say affordability remains the biggest hurdle for many would-be buyers. Elevated mortgage rates, combined with high home prices, continue to keep many first-time buyers on the sidelines.
For homeowners considering refinancing, the latest increase also makes replacing an older mortgage less attractive unless they have a compelling financial reason to do so.
Whether mortgage rates ease later this year will depend largely on the path of inflation, Treasury yields, and financial markets. For now, borrowers face a market where financing costs remain well above the levels seen just a few years ago, even as more homes become available for sale.