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Mortgage rates rose slightly this week as easing trade tensions between the US and China gave Wall Street more confidence that the economy could avoid entering a recession.
The average 30-year mortgage rate jumped to 6.81% this week through Wednesday, from 6.76% a week earlier, according to Freddie Mac data. Average 15-year mortgage rates were 5.92%, from 5.89%.
10-year Treasury yields, which mortgage rates closely track, moved higher in recent days after positive economic news lessened the odds of a Fed rate cut in the coming months. On Monday, the US and China reached a deal to temporarily slash the steep tariffs they had imposed on each other, a move many economists expect will help stave off a recession this year.
“It’s a catch-22 for homebuyers,” Chen Zhao, Redfin’s head of economics research, said in a statement. “Mortgage rates are unlikely to fall unless all of the new tariffs are eliminated, or if the country falls into a fairly severe recession — which would cut housing budgets for many Americans."
Read more: Mortgage and refinance interest rates today
Fading recession fears, coupled with a Consumer Price Index report that showed inflation cooled in April but is still running above the Fed’s target 2% range, gave traders confidence that the central bank will hold benchmark interest rates steady in the months ahead.
Treasury yields and mortgage rates aren’t directly affected by Fed policy but do move based on expectations about the future direction of interest rates. Traders don’t expect the Fed to cut interest rates until September, according to CME FedWatch.
Read more: When will mortgage rates go down? What experts say.
Although rates remain elevated, some buyers are proceeding with purchases. Mortgage applications to purchase a new home rose 2% through Friday compared with a week earlier, according to the Mortgage Bankers Association. Refinancing applications slipped 0.4% in the same time period.
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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