Washington D.C. – The average interest rate for a 30-year fixed mortgage has seen a slight increase, rising to 6.3% this week from 6.23% the previous week, according to Freddie Mac's latest survey. This uptick marks the end of a three-week period of declining rates, bringing the average back to where it stood two weeks ago. Borrowing costs for 15-year fixed-rate mortgages also saw a modest rise, increasing to 5.64% from 5.58%.
The Federal Reserve, meanwhile, announced on Wednesday that it would keep its benchmark federal funds rate unchanged, maintaining it within the current range of 3.5% to 3.75%. This decision, widely anticipated by markets, reflects ongoing concerns about rising inflation, which has been exacerbated by global energy price increases stemming from the conflict in Iran. This marks the third consecutive meeting where the central bank has held rates steady.
Federal Reserve Chair Jerome Powell indicated his intention to remain as a board governor after his term concludes in May, a move unprecedented for a Fed chief in recent history. Powell expressed concerns about the Fed's independence amidst political challenges, emphasizing the importance of setting monetary policy free from political pressure. The Fed's statement noted that the war in the Middle East contributes to a high level of uncertainty regarding the economic outlook, even as the economy continues to expand with low job gains and elevated inflation.
The rise in mortgage rates is partly attributed to an increase in the yield on U.S. 10-year Treasury bonds, a key benchmark for lenders. The 10-year Treasury yield was trading at 4.39% on Thursday, up from 4.34% a week prior.
Experts had forecasted mortgage rates to remain relatively stable in May, generally hovering in the low to mid-6% range. However, projections can shift rapidly based on inflation data and geopolitical developments. Some analysts suggest that rates could remain range-bound with a slight downward bias, while others anticipate they might hold steady or even climb slightly by the end of the month, depending on the resolution of ongoing international conflicts and domestic economic indicators.