Mortgage rates rise to highest level since mid-February

Mortgage rates increased to the highest level since mid-February, mortgage buyer Freddie Mac said Thursday.

Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage rose to 6.86% from last week's reading of 6.81%. It marked the highest level since Feb. 13, when the rate on a 30-year mortgage averaged 6.87%.

The average rate on a 30-year loan was 6.94% a year ago.

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"With more inventory for buyers to choose from than the last few years, purchase application activity continues to hold up," said Sam Khater, Freddie Mac's chief economist.

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The average rate on the 15-year fixed mortgage climbed to 6.01% from last week's reading of 5.92%. One year ago, the rate on the 15-year fixed note averaged 6.24%.

Meanwhile, the National Association of Realtors (NAR) reported on Thursday that home sales slipped 0.5% last month to a seasonally adjusted annual rate of 4 million units. Economists polled by Reuters had forecast home resales would rise to a rate of 4.10 million units.

Sales last month were the slowest for April since 2009, signaling a weak start to the spring selling season. They declined 2% on a year-over-year basis in April.

"Home sales have been at 75% of normal or pre-pandemic activity for the past three years," said Lawrence Yun, NAR's chief economist.

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Existing home sales are counted at the closing of a contract. Sales last month likely reflected contracts signed in February and March, when the average rate on the popular 30-year fixed-rate mortgage bounced around in the lower end of its 6.09%-6.73%, data from Freddie Mac showed.

Mortgage rates have increased in tandem with the yield on the benchmark 10-year U.S. Treasury note amid President Donald Trump's aggressive trade policy and concerns about the nation's deteriorating fiscal outlook after Moody's Investors Service cut its sovereign credit rating from the top "Aaa" level.

"At the macro level, we are still in a mild seller's market," Yun said. "But with the highest inventory levels in nearly five years, consumers are in a better situation to negotiate for better deals."

Reuters contributed to this report.