Mortgage rates increased for the first time in three weeks.
The average rate on a 30-year fixed-rate mortgage rose to 5.51%, mortgage-finance giant Freddie Mac said Thursday. That is up from 5.30% last week, when rates recorded the largest weekly decline since December 2008, but below the 13-year high of 5.81% recorded in June. A year ago, the 30-year mortgage averaged 2.88%.
Higher borrowing costs are weighing on demand for homes, slowing sales and price growth. Housing affordability reached its lowest level since 2006 in May, according to the National Association of REALTORS®, thanks in part to higher rates. The sharp increase in rates in the first half of the year has pushed some buyers off the market.
Mortgage applications have fallen for two weeks in a row, and sales of previously owned homes have fallen for four straight months. The country’s largest bank, JPMorgan Chase & Co., said Thursday that mortgage originations fell 45% in the second quarter from a year earlier.
Mortgage rates are closely tied to yields on the 10-year U.S. Treasury, which fell near their lowest level in more than a month last week as investors piled into government bonds. Yields and prices move in opposite directions. Treasurys are seen as a haven during times of economic uncertainty.
Declining demand and growing supply are reshaping the housing market at the peak of its selling season, George Ratiu, manager of economic research at Realtor.com, said in a statement. News Corp, parent of The Wall Street Journal, operates Realtor.com under license from the National Association of Realtors.
“We can expect the pace of sales to continue to slow as we move into the second half of the year and markets regain a much-needed sense of balance,” Mr. Ratiu said.