US Mortgage Rates Hit One-Year High Amid Rising Treasury Yields

Mortgage interest rates in the United States have reached their highest levels in around a year. According to data released by the Mortgage Bankers Association (MBA), the average contract rate for a 30-year fixed-rate mortgage rose by seven basis points to 6.76%, while the average rate on a 15-year fixed-rate mortgage increased by 11 basis points to 6.15%. This marks the highest level in over a year for both types of mortgages.

The increase in mortgage rates is attributed to rising Treasury yields and renewed inflation concerns, which have pushed borrowing costs higher. The yield on the benchmark 10-year US Treasury note stood at around 4.63% during the week, close to the 18-month high of 4.70%. Higher Treasury yields generally translate into increased mortgage borrowing costs.

The latest mortgage data was released ahead of the US Federal Reserve's monetary policy announcement, with financial markets anticipating further interest rate increases in the coming months. Inflation remains a concern, with the Federal Reserve's preferred gauge standing at an annual rate of 4.1% in May and expected to ease to 3.7% in June.

Higher borrowing costs have affected housing market activity, with the MBA's Mortgage Market Index declining by 6.4% on a seasonally adjusted basis during the week. Refinancing activity recorded the sharpest decline, falling 9.9% to its lowest level in 13 months. Applications for home purchase loans also weakened, reflecting reduced buyer demand due to affordability pressures.