After moving closer to 7% and then falling last week, the 30-year, fixed-rate moved a bit higher from last week’s 6.78%. A year ago, the rate averaged 5.3%.

WASHINGTON – The average long-term U.S. mortgage rate ticked back up this week, remaining a barrier for Americans trying to upgrade or buy their first home.

The average rate on the benchmark 30-year home loan rose to 6.81% this week from 6.78% last week, which was the lowest level in a month, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 5.3%.

High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already unaffordable to many Americans.

High inflation has driven the Federal Reserve to jack up interest rates since early last year. Beginning with its first hike in March 2022, the central bank has lifted its benchmark interest rate to between 5.1% and 5.3%, its highest level in 22 years.

Inflation has retreated since last summer, which has many on Wall Street hoping that the Federal Reserve’s quarter-point interest rate hike on Wednesday will the last of this cycle.

Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with interest rates can influence rates on home loans.

The average rate on a 30-year mortgage remains more than double what it was two years ago, when ultra-low rates spurred a wave of home sales and refinancing. The far higher rates now are contributing to a dearth of available homes. Homeowners who locked in those lower borrowing costs two years ago are reluctant to sell and jump into a higher rate on a new property.

The lack of housing supply is also a big reason home sales are down 23% over the past six months.

The average rate on 15-year fixed-rate mortgages, popular with those refinancing their homes, inched up to 6.11% from 6.06% last week. A year ago, it averaged 4.58%, Freddie Mac said.

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