The average rate on a 30-year mortgage in the U.S. has risen for the fifth consecutive week, reaching its highest point since early August. According to Freddie Mac, the rate increased to 6.72% from 6.54% the previous week. Despite this, it is still lower than the 7.76% average rate observed a year ago.
Borrowing costs for 15-year fixed-rate mortgages, favored by homeowners looking to refinance at a lower rate, also saw an increase. The average rate climbed to 5.99% from 5.71% last week. This is down from the 7.03% average rate a year ago, as reported by Freddie Mac.
An increase in mortgage rates can significantly impact borrowers, potentially adding hundreds of dollars in monthly costs. This reduction in purchasing power for homebuyers comes at a time when home prices are near all-time highs, even as the housing market experiences a sales slump dating back to 2022.
The average rate on a 30-year home loan in the US hasn’t been this high since Aug. 1, when it was 6.73%. Several factors influence mortgage rates, including the bond market’s reaction to the Federal Reserve’s interest rate policy decisions and data on inflation and the economy. This can affect the trajectory of the 10-year Treasury yield, which lenders use as a guide for pricing home loans. The yield on the 10-year Treasury was at 4.30% on the bond market at midday Thursday. As recently as mid-September, it was at 3.62%. Just days before, the Federal Reserve cut its main interest rate for the first time in more than four years and signaled further cuts through 2026. Although the central bank doesn’t set mortgage rates, its policy pivot created a path for mortgage rates to generally go lower. However, that hasn’t been the case in recent weeks due to a series of encouraging reports on inflation and the US economy.
The average rate on a 30-year mortgage in the US has risen for the fifth week in a row, driven by a stronger U.S. economy which has pushed Treasury yields higher.
On Tuesday, it was reported that consumer confidence in the U.S. surged more than economists had anticipated. Additionally, the number of job openings decreased slightly in September, although the number of hires remained relatively stable. Should the government’s October U.S. jobs report, due on Friday, exceed expectations, it could further increase bond yields. According to Sam Khater, Freddie Mac’s chief economist, ‘With several potential inflection points happening over the next week, including the jobs report, the 2024 election, and the Federal Reserve interest rate decision, we can expect mortgage rates to remain volatile.’ Khater continued, ‘Although uncertainty will persist, it seems that mortgage rates are peaking, and we do not anticipate them to reach the levels seen earlier this year.’The average rate on a 30-year mortgage in the US has risen for the fifth week in a row. Previously, in May, it reached its peak at 7.22%. However, by late September, the average rate had dropped to 6.08%, marking its lowest level in two years. Economists anticipate that mortgage rates will continue to fluctuate throughout this year. They generally predict that rates will ease in 2025, which could increase the affordability for home shoppers. This development might also result in higher home prices if more buyers enter the market.
