Mortgage rates tick higher but remain near 3-year low

Mortgage rates ticked higher this week but remain the lowest in three years, 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 rose to 6.09% from last week’s reading of 6.06%. 

The average rate on a 30-year loan was 6.96% a year ago.

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“With the economy improving and the average 30-year fixed-rate mortgage nearly a percentage point lower than last year, more homebuyers are entering the market,” said Sam Khater, Freddie Mac’s Chief Economist. “Buyers always should shop around for the best rate, as multiple quotes can potentially save them thousands.”

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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 decision, they closely track the 10-year Treasury yield. The 10-year yield hovered around 4.25% as of Thursday afternoon.

Meanwhile, the average rate on a 15-year fixed mortgage rose to 5.44% from last week’s reading of 5.38%.

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Realtor.com senior economist Anthony Smith said recent policy decisions have contributed to recent volatility, including President Donald Trump’s announcement that Fannie Mae and Freddie Mac would buy $200 billion in mortgage-backed securities.

“The announcement contributed to the recent rate declines, although uncertainty around implementation may limit the impact,” Smith said. “A separate executive order outlined a framework to restrict institutional investor participation in housing markets, but with key enforcement details still undefined, any near-term effects are likely to be limited and concentrated in select metros.”