WASHINGTON — Mortgage rates barely moved this week, leaving would-be homebuyers stuck with borrowing costs that remain high enough to keep monthly payments elevated.

Freddie Mac said the average 30-year fixed mortgage rate was 6.66% as of August 27, up slightly from 6.65% a week earlier and above 6.56% a year ago. The average 15-year fixed rate rose to 5.98%, from 5.95% the prior week. 

The bigger story is not the one-basis-point move.

It is how stubbornly mortgage rates remain in the mid-to-upper 6% range.

For a buyer taking out a $300,000 mortgage, a rate around 6.5% produces a principal-and-interest payment of roughly $1,896 a month. At 7%, that rises to about $1,996 — roughly $100 more every month before taxes, insurance or homeowners association costs are included. 

That difference becomes much larger on a $500,000 or $700,000 mortgage.

Freddie Mac said the broader economy remains resilient, while more homes coming onto the market and slower price growth in some regions are giving buyers more choices.

But affordability remains the obstacle.

A buyer can negotiate on the price of a house.

It is much harder to negotiate away the cost of financing it.

Mortgage rates are influenced heavily by movements in the bond market, inflation expectations and investor views about future Federal Reserve policy. Even when the Fed eventually cuts short-term interest rates, mortgage rates do not automatically fall by the same amount.

That is why buyers waiting for a dramatic drop have largely been disappointed.

Rates have moved around during the summer, falling as low as 6.43% in early July before climbing back toward their current level. 

For existing homeowners with mortgages locked in at 3% or 4%, today’s market also creates another problem.

Selling a home often means giving up that cheap mortgage and replacing it with one carrying a rate closer to 7%, discouraging some owners from putting properties on the market.

More inventory is beginning to ease that pressure in parts of the country, but financing remains expensive enough to keep many transactions from happening.

For consumers, the message is straightforward.

Mortgage rates are not surging this week.

They are simply refusing to come down enough to materially improve affordability.

JBizNews Desk | Washington

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