Average Rate for 30-Year Mortgage Increases for Sixth Straight Week

The average rate for a 30-year mortgage has increased for the sixth straight week.
The rate climbed to 6.79 percent from 6.72 percent last week, mortgage buyer Freddie Mac said Thursday.
This week’s average rate on a 30-year home loan is the highest since July 11, when it was 6.89 percent.
Borrowing costs on 15-year fixed-rate mortgages also increased to 6 percent this week from 5.99 percent last week.
Mortgage rates on a 30-year home loan have fluctuated throughout the year, reaching a peak of 7.22 percent in May. In late September, the average rate dipped to 6.08 percent, the lowest level in two years, after the Federal Reserve cut interest rates.
The recent increase in borrowing costs has discouraged some potential home shoppers.
Last week, mortgage applications fell 10.8 percent on a seasonally adjusted basis from the previous week, according to the Mortgage Bankers Association, the leading trade association for the real estate finance industry.
This was the sixth week in a row that mortgage applications dropped.
Meanwhile, applications for loans to refinance a mortgage fell 19 percent. But they were still 48 percent higher than in the same week last year.
There is still hope for potential home shoppers as real estate experts expect mortgage rates to stabilize by the end of 2024.
“While we still expect mortgage rates to stabilize by the end of the year, they will likely be at a higher level than markets were initially expecting prior to election week,” said Ralph McLaughlin, senior economist at the real estate listings website Realtor.com.
One of the several factors that influence mortgage rates is the yield on U.S. 10-year Treasury bonds, which lenders use as a guide to price home loans. The higher the yields on long-term U.S. Treasuries, the more confidence investors have in the future of the economy. On the other hand, high long-term yields can also signal an expectation of rising inflation.
Bond yields have already been rising following encouraging reports on the economy, including inflation. But this week, yields surged because of expectations that President-elect Donald Trump’s economic plan based on higher tariffs, lower tax rates and light regulation could lead to bigger economic growth but also higher inflation and federal government debt.
At midday Thursday, the yield on 10-year Treasury bonds was 4.36 percent. The yield was at 3.62 percent as recently as mid-September.
“Rates and borrower demand will likely remain volatile in the coming weeks as financial markets digest both the election results and the Fed’s upcoming monetary policy decisions,” MBA CEO Bob Broeksmit said.
Mortgage rates are also influenced by the federal funds rate, which is the Federal Reserve’s benchmark interest rate.
The Fed lowered its benchmark rate, which was at a 23-year high, by a half-percentage point to between 4.75 and 5 percent in September.
The federal funds rate was raised by the Fed 11 times in 2022 and 2023 to curb high inflation, which hit both the United States and countries around the world after the COVID-19 pandemic. September’s interest rate cut was the first in four years.
On Thursday, the Fed cut rates by a quarter-point again, lowering rates to between 4.5 to 4.75 percent.
The federal funds rate is the target interest rate at which commercial banks borrow and lend their extra reserves to one another overnight. If the federal funds rate continues to decrease, the cost of consumer borrowing—including mortgages, auto loans and credit cards—should go down over time.
This article includes reporting from The Associated Press.