Mortgage Rates in the U.S. Increase for a Seventh Straight Week

(Bloomberg) -- Mortgage rates in the U.S. rose for a seventh straight week.

The average for a 30-year loan was 3.18%, up from 3.17% last week and the highest since June, Freddie Mac data showed Thursday.

Rates have increased from the record low of 2.65%, reached in early January. That's made homes more expensive for buyers, many of whom have to stretch to afford a purchase as they compete for the slim supply of properties on the market.

The bidding wars, sparked by frenzied demand for more space in the pandemic, are taking a toll. The National Association of Realtors' index of contracts to buy previously owned homes fell in February by the most since last April -- a month when lockdowns to stop the spread of Covid-19 severely limited deals across much of the U.S.

“While purchase demand remains strong, the marginal buyer is feeling the affordability squeeze resulting from the increases in mortgage rates and home prices we've experienced in recent months,” Sam Khater, Freddie Mac's chief economist, said in a statement.

The boom in refinancing also has trailed off, crimping profits for the mortgage industry after a record year in 2020.

Borrowing costs may continue to rise, along with yields for the benchmark 10-year Treasuries, as the fresh federal stimulus and vaccination efforts boost optimism for an economic rebound.

©2021 Bloomberg L.P.