Housing News

Mortgage Interest Rates Tick Up, But Remain Below Last Year

Mortgage interest rates moved higher for the third week in a row as the summer homebuying season continued.

The average rate on a 30-year, fixed-rate mortgage rose to 6.58% for the week ending July 23, according to Freddie Mac. That was up slightly from 6.55% a week earlier. But rates remained below the 6.74% average recorded at this time last year.

The conflict in Iran and the ensuing higher oil prices are contributing to higher mortgage rates.

“While last week’s cooler-than-expected [inflation] brought some optimism, the renewed geopolitical tension is pushing oil prices higher, which would once again add upward pressure on inflation,” said Realtor.com economist Jiayi Xu, in a statement.

A homebuyer purchasing a $400,000 home with 20% down would pay about $34 less per month at this week’s average mortgage rate than they would have at this time last year.

At 6.58%, the monthly principal and interest payment comes to roughly $2,039, not including property taxes, homeowners insurance, or homeowner association costs.

That’s compared with about $2,073 when rates averaged 6.74% a year ago. Over 12 months, that amounts to about $407 in savings, or roughly $12,200 over the life of a 30-year, fixed-rate loan.

Nationally, home list prices were down 2.5% year-over-year in June to a median $430,000, according to Realtor.com data.

“It’s not just about rates for homebuyers, but rather the full financial picture of buying,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. The multiple listing service covers the mid-Atlantic region.

Indeed, mortgage rates are only one piece of the affordability equation.

Homebuyers showed renewed interest in the market last week. Mortgage applications to purchase a home jumped 6% in the week ending July 17 compared with the previous week, according to the Mortgage Bankers Association (MBA). Purchase applications were also 0.2% higher than the same week last year.

Applications to refinance an existing mortgage declined 2% from the previous week but remained 7% higher than a year earlier.