At its last meeting of policymakers, the central bank signaled that it could finally pause its yearlong campaign of rate hikes, though a pause would likely only nudge mortgage rates slightly lower. The Fed has raised its benchmark interest rate 10 times in 14 months. Treasurys and what the Fed does with interest rates influence rates on home loans. Investors’ expectations for future inflation, global demand for U.S.
“Resolving the debt impasse sooner, rather than later, would mitigate potential adverse effects on the housing market, which is already contending with high prices and elevated mortgage rates,” Xu said. Treasury bonds, which could lead to a “significant increase” in borrowing costs, including mortgages, said Jiayi Xu, an economist at. Jitters over the possibility that the government ends up defaulting on its debt could cause creditors to ask for higher interest rates on 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. 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. 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.īond traders are also factoring in the possibility that the U.S. The 10-year Treasury yield has been mostly rising of late, climbing to 3.79% in afternoon trading Thursday. 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 median monthly payment listed on applications for home purchase loans in April rose to $2,112, up nearly 12% from a year ago and a 0.9% increase from March, the Mortgage Bankers Association said Thursday. High rates can add hundreds of dollars a month in costs for homebuyers, limiting how much buyers can afford in a market that remains unaffordable to many Americans after years of soaring home prices and limited housing inventory.
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