Long-term U.S. mortgage rates climbed upward this week, slightly worsening affordability for homebuyers.
Mortgage buyer Freddie Mac said Thursday that the average rate on 30-year, fixed-rate mortgages rose to 4.47 percent from 4.42 percent last week. This benchmark rate averaged 3.97 percent a year ago.
With the start of the traditional spring homebuying season, people shopping for homes are dealing with higher loan costs and fewer properties for sale. Rising rates could further erode inventories as existing homeowners renovate homes rather than putting them up for sale to avoid a more expensive mortgage that would come with a new house.
The Joint Center for Housing Studies of Harvard University estimates that spending on remodeling will exceed $340 billion new years, an increase of more than 7 percent.
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If higher rates lead to fewer homes on the market, it could push prices higher and further squeeze would-be homebuyers.
"These increasing rates will serve as an added challenge to home shoppers in what is already perhaps the toughest home buying market in recorded history," said Danielle Hale, chief economist for Realtor.com.
Home borrowing costs have risen in response to higher yields on 10-year U.S. Treasury notes. The interest charged on this form of government debt has risen from 2.78 percent last week to 2.9 percent early Thursday.
The interest paid by the government is up along with the federal budget deficit in the wake of President Donald Trump's tax cuts and plans by the Federal Reserve to raise short-term borrowing rates for banks.
The average rate on 15-year, fixed-rate loans rose this week to 3.94 percent from 3.87 percent.