Average rate on a 30-year mortgage in the US rises for fifth straight week

The average rate on a 30-year mortgage in the U.S. rose for the fifth straight 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. That’s still down from a year ago, when the rate averaged 7.76%.

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 5.99% from 5.71% last week. A year ago, it averaged 7.03%, Freddie Mac said.

When mortgage rates increase they can add hundreds of dollars a month in costs for borrowers, reducing homebuyers’ purchasing power at a time when home prices remain near all-time highs though the housing market is in a sales slump.

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.

Yields have been rallying following a string of stronger-than-expected reports on the U.S. economy.

“With several potential inflection points happening over the next week, including the jobs report, the 2024 election, and the Federal Reserve interest rate decision, we can expect mortgage rates to remain volatile,” said Sam Khater, Freddie Mac’s chief economist. “Although uncertainty will remain, it does appear mortgage rates are cresting, and we do not expect them to reach the highs that we saw earlier this year.”

The yield on the 10-year Treasury was at 4.30% on the bond market at midday Thursday. It was at 3.62% as recently as mid-September, just days before 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.

The average rate on a 30-year mortgage fell in late September to 6.08% — its lowest level in two years. At the same time, home prices have kept rising, albeit at a slower rate.