The average U.S. 30-year mortgage rate rose for a second week in a row, though it remains near its lowest point so far this year.
The average long-term mortgage rate rose to 6.24% from 6.22% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.78%.
As recently as two weeks ago, the average rate was at 6.17%, the lowest level in more than a year.
Borrowing costs for 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, fell slightly this week. The rate averaged 5.49%, down from 5.5% last week. A year ago, it was 5.99%, Freddie Mac said.
Mortgage rates are affected by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations about the economy and inflation. They generally track the trajectory of the 10-year Treasury yield, which lenders use as a guide for pricing home loans.
The 10-year yield was at 4.10% at midday Thursday, up slightly from a week ago.
When mortgage rates rise, they reduce the purchasing power of home buyers. The average 30-year mortgage rate has held above 6% since September 2022, when mortgage rates began rising from historic lows. The housing market has been in the doldrums ever since.
Sales of previously occupied US homes fell to their lowest level in nearly three decades last year. Sales have been slow this year but accelerated in September to their fastest pace since February as mortgage rates fell.
“Lower rates could finally prompt some buyers to enter the market, which could lead to a surprisingly busy November and December, a time of year when home sales activity typically slows,” said Lisa Sturtevant, chief economist at Bright MLS.
Applications for home loans jumped nearly 6% last week to the strongest pace since September, even as mortgage rates rose, according to the Mortgage Bankers Association.
Homeowners eager to refinance their current home loan at a lower rate also benefited from the drop in mortgage rates at the end of the summer. Applications for mortgage refinancing made up about 56% of all mortgage applications last week, down slightly from the previous week.
Mortgage rates began to fall in July following the Federal Reserve’s decision in September to cut its key interest rate for the first time in a year amid growing concerns about the US labor market. The Fed cut its key interest rate again last month, but Fed Chairman Jerome Powell warned that further rate cuts are not guaranteed.
Wall Street traders have cut their bets that the Fed will cut its key interest rate at its next meeting in December, with it now at 53%, down from nearly 70% a week ago, according to CME Group data.
The central bank does not set mortgage interest rates, and even if it lowers its short-term rates, it does not necessarily mean that home loan rates will necessarily fall.
Last fall, after the Fed cut its rate for the first time in more than four years, mortgage rates moved higher, finally reaching just above 7% this January. At the time, the yield on 10-year government bonds was climbing to 5%.
Despite mortgage rates falling from their 2025 highs at the start of the year, affordability remains a major hurdle for many first-time homeowners after years of skyrocketing home prices. The Trump administration recently said it was considering backing a 50-year mortgage to help ease the crisis, though the announcement drew swift criticism from many economists and politicians.
This article was generated from an automated news agency source without text modification.
