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Mortgage rates spike over economic uncertainty

By Jay Spoehel

May 25, 2023

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Average long-term mortgage rate climbed to 6.57% this week

The average long-term U.S. mortgage rate climbed this week to its highest level since mid-March, according to weekly data compiled by mortgage buyer Freddie Mac.

"The U.S. economy is showing continued resilience which, combined with debt ceiling concerns, led to higher mortgage rates this week," said Sam Khater, Freddie Mac’s chief economist.
"Dampened affordability remains an issue for interested homebuyers and homeowners seem unwilling to lose their low rate and put their home on the market. If this predicament continues to limit supply, it could open up an opportunity for builders to help address the country’s housing shortage." Khater continued.

Meanwhile, the average rate on a 15-year fixed mortgage rose to 5.97% this week from 5.75% a week ago. At this time last year, the 15-year fixed-rate mortgage averaged 4.31%.

The average rate on a 30-year home loan has risen two weeks in a row, echoing moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans.

The 10-year Treasury yield has been mostly rising of late, climbing to 3.79% in afternoon trading Thursday. Two weeks ago, it was at 3.39%.

The move up in bond yields comes as investors react to stronger-than-expected economic data and the implications that could have on whether the Federal Reserve will raise interest rates again next month.

Bond traders are also factoring in the possibility that the U.S. government may default on its debt as the White House and GOP leadership wrangle over a deal to raise the federal government’s debt ceiling so it can avoid an unprecedented default as soon as June 1.

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