Mortgage rates rise for the fourth week in a row

Home Buying Mortgage rates rise for the fourth week in a row The latest increase is a setback for buyers, as it reduces their purchasing power at a time when home prices remain near record highs. The average rate is down from a year ago, when it climbed to a 23-year high of 7.79 percent. Five years ago, it sat at 3.75 percent. David Zalubowski/Associated Press
The average rate on a 30-year mortgage in the United States rose again this week, reaching its highest level in nearly three months.
The rate rose to 6.54 percent from 6.44 percent last week, mortgage buyer Freddie Mac said Thursday. Despite the recent uptick, the average rate is down from a year ago, when it climbed to a 23-year high of 7.79 percent. It is up significantly from five years ago, however, when the rate was 3.75 percent, according to the Federal Reserve Bank of St. Louis.
When mortgage rates increase, they can add hundreds of dollars a month in costs for borrowers. The average rate has now risen four weeks in a row. It hasn’t been this high since Aug. 1, when it was 6.73 percent.
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Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also increased this week. The average rate rose to 5.71 percent from 5.63 percent last week. A year ago, it averaged 7.03 percent, Freddie Mac said. Five years ago, it averaged 3.18 percent, according to the Federal Reserve Bank of St. Louis.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions and data on inflation and the economy. That can move the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
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Four weeks ago, the average rate on a 30-year mortgage slipped to 6.08 percent — its lowest level in two years — after the Federal Reserve cut its main interest rate for the first time in more than four years and signaled further cuts through 2026. While the central bank doesn’t set mortgage rates, its policy pivot cleared a path for mortgage rates to generally go lower.
However, Treasury yields have pushed higher in recent weeks following reports showing the US economy remains stronger than expected. The yield on the 10-year Treasury was at 4.20 percent Thursday afternoon. It was at 3.62 percent in mid-September, just days before the Fed’s rate cut.
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“The continued strength in the economy drove mortgage rates higher once again this week,” said Sam Khater, Freddie Mac’s chief economist. “Over the last few years, there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative. This has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy.”
The latest increase in mortgage rates is a setback for prospective home buyers, as it reduces their purchasing power at a time when home prices remain near record highs despite a housing market slump dating back to 2022.
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Sales of previously occupied US homes slowed in September to the weakest annual pace in nearly 14 years even as mortgage rates eased. Sales of new homes, meanwhile, rose nationally in September by 6.3 percent from a year earlier, the US Census Bureau reported Thursday. Home builders have lowered prices and offered incentives like paying to lower the rate on home loans to mitigate the impact of elevated mortgage rates.
Economists generally expect mortgage rates to remain near their current levels, at least this year. Fannie Mae projects the rate on a 30-year mortgage will average 6.2 percent in the October-December quarter and decline to an average of 5.7 percent in the same quarter next year.
“The big picture is for mortgage rates to fall over the coming months though in the short-term it is very likely for rates to move up and down,” said Lisa Sturtevant, chief economist at Bright MLS.