Mortgage rates jumped this week, mortgage buyer Freddie Mac said Thursday.
Freddie Mac’s latest Primary Mortgage Market Survey, released Thursday, showed the average rate on the benchmark 30-year fixed mortgage climbed to 6.51% from last week’s reading of 6.36%.
The average rate on a 30-year loan was 6.86% a year ago.
“As rates fluctuate, aspiring buyers should remember that by shopping around for the best mortgage rate and getting multiple quotes, they can potentially save thousands,” said Sam Khater, Freddie Mac’s chief economist.
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The average rate on a 15-year fixed mortgage rose to 5.85% from last week’s reading of 5.71%.
“The conflict in the Middle East continues to play an outsized role in how investors are assessing the economic outlook, and mortgage rates are moving accordingly,” said Realtor.com senior economist Anthony Smith. “In recent weeks, headlines suggesting escalation have tended to push longer-term yields higher, while signs of progress toward resolution have had the opposite effect. That dynamic, rather than any domestic policy development, remains the primary force shaping borrowing costs right now.”
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The rise in mortgage rates comes a day before President Donald Trump is due to swear in Kevin Warsh as the Federal Reserve’s new chair, succeeding Jerome Powell, whom Trump criticized tirelessly for keeping interest rates too high.
Notwithstanding the change in guard, financial markets are betting the central bank will not cut short-term rates at all this year and may actually increase them if higher oil prices work their way into inflation more broadly, as some Fed policymakers say they worry is already happening.
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“A Fed leadership transition is underway this week, but given that the chair is one vote among many, and that a resurgence in inflation is likely to reinforce caution among FOMC members regardless of leadership, that story is unlikely to move rates in a meaningful way,” Smith said.
Trump this week told the Washington Examiner that he will let Warsh do as he wishes with rates, and Warsh told lawmakers last month that he has made Trump no promises.
Mortgage rates are affected by several factors, including the Federal Reserve and geopolitics. Though mortgage rates are not directly affected by the Fed’s interest rate decisions, they closely track the 10-year Treasury yield. The 10-year yield hovered around 4.57% as of Thursday afternoon.
Reuters contributed to this report.
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