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NEW YORK, Oct 4 (Reuters) - Interest rates on U.S. 30-year fixed-rate mortgages edged down as longer-dated bond yields had retreated on curve-flattening trades following the Federal Reserve's widely expected rate increase last week, Freddie Mac said on Thursday.
Borrowing costs on 30-year mortgages, the most widely held home loan type in the United States, averaged 4.71 percent in the week ended Oct. 4, which was a tad lower than 4.72 percent the week before, the mortgage finance agency said.
Freddie Mac's latest measures on home borrowing costs did not reflect the bond market selloff on Wednesday when benchmark 10-year Treasury yield hit a seven-year peak, a company spokesman said.
Treasury yields, which influence mortgage rates, have increased since Wednesday on upbeat economic data and perceived hawkish comments from Federal Reserve officials.
In early Thursday trading, the 10-year yield touched 3.232 percent.
Rising mortgage rates will likely become another headwind for the housing sector that is already struggling with tight inventory and rising building costs.
"With mortgage rates expected to track higher, it’s going to be a challenge for the housing market to regain momentum,” Freddie Mac's chief economist Sam Khater said in a statement. (Reporting by Richard Leong Editing by Susan Thomas)