Estimated read time: 3-4 minutes
- Mortgage rates have risen above 7%, influenced by U.S. Treasury bond market concerns.
- Moody's downgraded U.S. credit rating, citing increased debt from President Donald Trump's tax cuts.
- Phil Dean advises Utahns to weigh home price risks against interest rate uncertainties.
SALT LAKE CITY — Mortgage rates are up this week.
A 30-year fixed-rate mortgage is once again above 7%, according to Mortgage News Daily's index. A day earlier, the site that tracks mortgage rates said the average rate rose from 7.05% to 7.08% "the highest closing level in just over three months."
By midday Thursday, the index had the rate down slightly, to 7.07%.
The reason mortgage rates are getting higher? A weaker market for U.S. Treasury bonds due to concerns about spending in President Donald Trump's "big, beautiful bill" that passed the House early Thursday morning.
The U.S. credit rating was downgraded last Friday by Moody's Ratings with a warning that the 2017 tax cuts made permanent in the Trump bill would increase the national debt by $4 trillion over the coming decade.
"In general, the bond market has not been enthusiastic about how that process has evolved," Mortgage News Daily's Matthew Graham said in a Wednesday post about the impact of the budget debate in Congress on rates.
"Bonds were hoping for a tighter leash on spending because lower spending implies lower bond issuance — something that would help rates move lower, all other things being equal," Graham said, noting that the bill is expected to "involve more spending than bonds wanted."
Phil Dean, chief economist at the University of Utah's Kem C. Gardner Policy Institute, pointed to inflation fears.
"Ongoing (and renewed) concerns about inflation continue to drive high interest rates," Dean told the Deseret News. "Although overall CPI (consumer price index) price increases have moderated, I think the inflation resurgence risk moving forward is real."
The Federal Home Loan Mortgage Corporation, better known as Freddie Mac, reported Thursday the weekly average 30-year fixed rate mortgage was at 6.86%, a 0.05 percentage point increase for the second week in a row.
Last week, Freddie Mac touted "stable mortgage rates" that were attracting homebuyers. Thursday, the agency noted, "Mortgage rates inched up this week but continue to remain lower than one year ago," when the weekly average was 0.08 percentage points higher.
The Freddie Mac analysis of the week's movement on rates was still upbeat. "With more inventory for buyers to choose from than the last few years, purchase application activity continues to hold up," it said.
Dean's advice for would-be homebuyers in Utah right now?
"Utahns considering a home purchase have to weigh the potential risk of higher future home prices against interest rate risks," he said.
"For someone purchasing their first home in particular, I generally recommend not trying to time the market if they can afford the home purchase, particularly because they typically can refinance in the future if rates drop," Dean said.
Nationally, buyer hesitancy when it comes to making big purchases is seen as continuing, due to the uncertainty surrounding the effects of Trump's policies, including his on-again, off-again tariffs that have roiled financial markets.
The drop in demand, along with an increase in the nation's housing supply, has led to U.S. home prices falling by 0.1% in April, according to a new analysis by Redfin, a Seattle-based brokerage site. The month-over-month decline is the first since September 2022.
