Home shoppers hoping for a break in affordability as the spring homebuying season wraps up may be in for another letdown.
The war with Iran and the inflation spike that followed have kept mortgage rates stubbornly high, while fresh fears that the Federal Reserve could raise interest rates to contain price pressures have only added to the uncertainty. At the same time, a bipartisan housing bill, aimed at boosting supply and easing some of that affordability strain over the next few years, is set to automatically become law at midnight on Friday into Saturday, unless President Donald Trump vetoes it.
This week, the average 30-year fixed mortgage was 6.49%, according to Freddie Mac, hovering near the highest levels of the year.
Mortgage rates loosely track the US 10-year Treasury yield, which is closely tied to inflation expectations. The yield, which moves in the opposite direction to bond prices, has remained elevated as investors worry that higher oil prices and the Middle East conflict could lead to stubborn inflation and, eventually, interest rate hikes from the Fed.
A recent tentative deal between the US and Iran had somewhat calmed bond market fears but, this week, tensions flared up again, with the US carrying out additional strikes on Iran, sending oil prices – and the 10-year yield – higher.
