The average U.S. 30-year mortgage rate rose for a fifth consecutive week, returning to its highest level since early August.
The rate rose to 6.72% from 6.54% last week, mortgage buyer Freddie Mac said Thursday. It is still lower than a year ago, when the average rate was 7.76%.
Borrowing costs for 15-year fixed-rate mortgages also increased this week. The average rate rose to 5.99% from 5.71% last week. A year ago, the average was 7.03%, Freddie Mac said.
When mortgage rates rise, they can add hundreds of dollars a month to lenders’ costs, reducing homebuyers’ purchasing power at a time when home prices remain at all-time highs even as the housing market is in a slump.
Mortgage rates are affected by a number of factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions and data about inflation and the economy. That could move the trajectory of the 10-year Treasury yield, which lenders use as a guide for pricing home loans.
Yields rose on stronger-than-expected reports on the US economy.
“With a number of potential turning points coming up next week, including the jobs report, the 2024 election and the Federal Reserve’s interest rate decision, we can expect mortgage rates to be volatile,” said Freddie Mac Chief Economist Sam Khater. “While uncertainty will remain, mortgage rates appear to be on the rise, and we do not expect them to reach the highs seen earlier this year.”
The 10-year Treasury yield was at 4.30% in the bond market at midday Thursday. It was at 3.62% as recently as mid-September, a few days earlier The Federal Reserve cut the key interest rate for the first time in more than four years and indicated further cuts until 2026. Although the central bank does not set mortgage rates, its policy focus cleared the way for lower mortgage rates overall.
The average 30-year mortgage rate fell at the end of September to 6.08% – the lowest level in two years –. at the same time housing prices have continued to rise, albeit at a slower pace.
