Long-term mortgage rate snaps 5-week string of increases

The average rate on a 30-year mortgage fell for the first time in four weeks, a slight relief for home shoppers already facing the challenges of rising housing prices and a shortage of homes for sale.

The rate fell to 7.09% from 7.22% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.35%.

The modest pullback followed a five-week string of increases that pushed the average rate to its highest level since Nov. 30. When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, limiting how much homebuyers can afford.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also declined this week, pulling down the average rate to 6.38% from 6.47% last week. A year ago, it averaged 5.75%, Freddie Mac said.

Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Treasury yields have largely been easing since Federal Reserve Chair Jerome Powell said last week that the central bank remains closer to cutting its main interest rate than hiking it, despite a string of stubbornly high readings on inflation this year. A cooler-than-expected jobs report on Friday, meanwhile, suggested the U.S. economy could still pull off the delicate balancing act of avoiding getting too cold or too hot.

Still, the Fed has maintained it doesn’t plan to cut interest rates until it has greater confidence that price increases are slowing sustainably to its 2% target.