Average US Long-Term Mortgage Rate Rises Again
Introduction to Mortgage Rate Trends
The average rate on a 30-year U.S. mortgage edged higher for the second week in a row, though it remains near its low point so far this year. The average long-term mortgage rate ticked up to 6.24% from 6.22% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.78%. Just two weeks ago, the average rate was at 6.17%, its lowest level in more than a year.
Factors Influencing Mortgage Rates
Mortgage rates are influenced by several factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The 10-year yield was at 4.10% at midday Thursday, up slightly from a week ago.
Impact on Homebuyers
When mortgage rates rise, they reduce homebuyers’ purchasing power. The average rate on a 30-year mortgage has been stuck above 6% since September 2022, the year mortgage rates began climbing from historic lows. The housing market has been in a slump ever since. Sales of previously occupied U.S. homes sank last year to their lowest level in nearly three decades. Sales have been sluggish this year, but accelerated in September to their fastest pace since February as mortgage rates eased.
Current Market Trends
“Lower rates could finally be prompting some buyers to get into the market, which could lead to a surprisingly busy November and December, a time of the year when home sales activity usually slows,” said Lisa Sturtevant, chief economist at Bright MLS. Applications for loans to buy a home jumped nearly 6% last week to their strongest pace since September, even as mortgage rates ticked higher, according to the Mortgage Bankers Association.
Mortgage Refinancing
The late-summer pullback in mortgage rates has also benefited homeowners eager to refinance their current home loan to a lower rate. Applications for mortgage refinancing loans accounted for about 56% of all mortgage applications last week, down slightly from the previous week. Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, edged lower this week. The rate averaged 5.49%, down from 5.5% last week. A year ago, it was 5.99%, Freddie Mac said.
Federal Reserve’s Role
Mortgage rates began declining in July in the lead-up to the Federal Reserve’s decision in September to cut its main interest rate for the first time in a year amid growing concern over the U.S. labor market. The Fed lowered its key interest rate again last month, but Fed Chair Jerome Powell cautioned that further rate cuts weren’t guaranteed. Wall Street traders have reduced their bets that the Fed will cut its main interest rate at its next meeting in December, now seeing a 53% chance of that, down from nearly 70% a week ago, according to data from CME Group.
By ALEX VEIGA, AP Business Writer
Conclusion
Despite the pullback in mortgage rates from their 2025 highs at the start of the year, affordability remains a major hurdle for many aspiring homeowners following years of skyrocketing home prices. The Trump administration recently said it is considering backing a 50-year mortgage to help alleviate the crisis, though the announcement drew swift criticism from many economists and policymakers.
FAQs
- Q: What is the current average rate on a 30-year U.S. mortgage?
- A: The average rate on a 30-year U.S. mortgage is 6.24%.
- Q: How do mortgage rates affect homebuyers?
- A: When mortgage rates rise, they reduce homebuyers’ purchasing power.
- Q: What factors influence mortgage rates?
- A: Mortgage rates are influenced by the Federal Reserve’s interest rate policy decisions, bond market investors’ expectations for the economy and inflation, and the 10-year Treasury yield.
- Q: Are mortgage rates expected to decrease?
- A: It’s uncertain; the Federal Reserve has cut its main interest rate, but further cuts are not guaranteed, and the impact on mortgage rates can vary.
