Average long-term U.S. mortgage rate slips to 6.58%

LOS ANGELES >> The average longterm U.S. mortgage rate has edged lower for the second time in as many weeks, though it remains more than double what it was a year ago — a significant hurdle for many would-be homebuyers.

Mortgage buyer Freddie Mac reported Wednesday that the average on the benchmark 30-year rate fell to 6.58% from 6.61% last week. A year ago the average rate was 3.1%.

The rate for a 15-year mortgage, popular with those refinancing their homes, fell to 5.90% from 5.98% last week. It was 2.42% one year ago.

Last month, the average longterm U.S. mortgage rate breached 7% for the first time since 2002. It climbed to 7.08% again earlier this month, but has pulled back in the two weeks since.

“In recent weeks, rates have hit above 7% only to drop by almost half a percentage point,” noted said Sam Khater, Freddie Mac’s chief economist. “This volatility is making it difficult for potential homebuyers to know when to get into the market, and that is reflected in the latest data which shows existing home sales slowing across all price points.”

Mortgage rates have more than doubled from where they were in early January, echoing a sharp rise in the yield on the 10-year Treasury note. The yield is influenced by a variety of factors, including global demand for U.S. Treasurys and investors’ expectations for future inflation, which heighten the prospect of rising interest rates overall.

The Federal Reserve, which has been hiking its short-term lending rate since March in a bid to crush the highest inflation in decades, raised its rate again early this month by 0.75 percentage points, three times its usual margin, for a fourth time this year. Its key rate now stands in a range of 3.75% to 4%.

While recent data suggest inflation may have peaked, stoking hope that the Fed will begin to ease up on its rate increases, recent comments by Fed officials have dimmed such optimism.

Last week, James Bullard, who leads the Federal Reserve Bank of St. Louis, said that the Fed may have to raise its benchmark interest rate much higher than it has previously projected to get inflation under control.