U.S. borrowing costs got a small reprieve this week, but the broader pressure point is still the same, the 30-year mortgage rate remains well above where it was just weeks ago, and that keeps the spring housing market under strain. Freddie Mac said the average 30-year fixed rate slipped to 6.37 percent from 6.46 percent, after five straight weekly increases pushed borrowing costs to a nearly seven-month high. A year ago, the average was 6.62 percent.
The catalyst is not the housing market itself but the war with Iran, which has pushed up oil prices, stirred inflation worries and lifted the 10-year Treasury yield, the benchmark banks use to price home loans. In late February, before the conflict broke out, the 30-year rate had briefly dipped to 5.98 percent, just below 6 percent for the first time in more than three years. That swing translates into real money: on a $500,000 home with 20 percent down, CNN estimated a buyer locking in today would pay more than $36,000 more over 30 years than someone borrowing in February.
The pain does not stop at housing. CNN said rising Treasury yields are also keeping auto financing and credit card rates elevated, even if this week’s mortgage move eased a little. Five-year auto loan rates have hovered around 7 percent, and average credit card rates remain above 19 percent, leaving households with pricier debt right as gas and car prices are already high. If markets keep assuming the conflict runs long, borrowing costs are likely to stay sticky rather than snap back.
One more drag is building underneath all of it. The labor market is still adding jobs, but the share of the working-age population in the labor force has slipped to 61.9 percent, its lowest since 1977 outside the pandemic, according to The Wall Street Journal. An aging population and tighter immigration are shrinking the pool of available workers, which can make it harder for the economy to absorb higher financing costs without losing momentum.
