US mortgage rates rise to highest level since August as war pushes up inflation

Mortgage rates in the United States surged to their highest level since August this week, posing a threat to the spring housing season that was just starting to show signs of life. Freddie Mac announced on Thursday that the average rate for a 30-year fixed-rate mortgage rose from 6.36% to 6.51%, marking the largest single-week increase since the end of March. The housing market has been constrained by geopolitical tensions, with the Iran war pushing up oil prices, inflation, and bond yields. The yield on 10-year US Treasuries has been hovering around a one-year high, while the yield on 30-year Treasuries is not far from its highest level since 2007. Analysts who previously expected the Fed to cut interest rates are now weighing the possibility of a rate hike. Despite this, the market has shown more resilience than expected. The National Association of Realtors reported on Tuesday that pending home sales for existing homes rose for the third consecutive month in April. Data from Realtor.com shows that new listings and pending sales are at their highest levels since 2022. Compared to the sluggish performance of last spring, homebuyers at least do not have to face average mortgage rates of 6.86% from a year ago.