The average rate for a 30-year U.S. mortgage has increased slightly for the second consecutive week, rising to 6.34% from 6.30% the previous week, according to Freddie Mac. A year earlier, the same rate averaged 6.12%. This upward trend in mortgage rates occurs amid a backdrop of fluctuating economic conditions.
Influencing Factors Behind Mortgage Rate Changes
Mortgage rates are shaped by several elements, including the Federal Reserve’s interest rate policies. They often reflect the yield on 10-year Treasury bonds, which serve as a benchmark for lenders. As of midday Thursday, the 10-year yield stood at 4.10%, down from 4.19% the week prior. This decline coincided with a series of discouraging economic reports, particularly concerning the job market.
Federal Reserve’s Role
In July, mortgage rates began to dip in anticipation of the Federal Reserve’s decision to cut its main interest rate for the first time in a year, due to rising concerns about the job market. However, Fed Chair Jerome Powell has taken a cautious stance on further rate cuts. This contrasts with some members of the Fed’s rate-setting committee, appointed by former President Donald Trump, who advocate for quicker reductions.
The Impact on the Housing Market
The housing market has struggled since 2022, when mortgage rates began to rise from historic lows. Sales of pre-owned homes in the U.S. dropped to their lowest level in nearly three decades last year. Currently, home sales remain below the levels seen in 2024.
Future Projections
The second consecutive increase in mortgage rates may mirror previous trends. Last year’s Fed rate cut initially led to a decrease in mortgage rates, but they soon resumed their upward trajectory, surpassing 7% by mid-January. This year, experts anticipate that mortgage rates will remain near the mid-6% range.
Refinancing Trends
Despite the recent uptick, the decline in mortgage rates earlier this summer has encouraged many homeowners to consider refinancing. However, for refinancing to appeal to a broader audience, rates need to drop below 6%. Currently, about 81% of U.S. homes have a mortgage rate of 6% or lower, as reported by Realtor.com.
Current Rates for Fixed-Rate Mortgages
Other borrowing costs have also seen slight increases. The current average rate for 15-year fixed-rate mortgages is now 5.55%, up from 5.49% the previous week, and higher than last year’s average of 5.25%.
- Average 30-year mortgage rate: 6.34% (last week: 6.30%)
- Average 15-year mortgage rate: 5.55% (last week: 5.49%)
- 10-year Treasury yield: 4.10% (last week: 4.19%)
- Percentage of homes with a rate of 6% or lower: 81%
The fluctuations in mortgage rates will continue to influence the housing market and borrowing behaviors moving forward.
