This week, the average long-term mortgage rate in the United States increased slightly once more, staying at its highest level since July.
Mortgage behemoth Freddie Mac reported that the benchmark 30-year fixed rate loan rate increased to 6.93% from 6.91% the previous week. A year ago, it was at 6.66%. It has been rising for four weeks in a row.
The increase in house loan costs is a result of rising bond yields, particularly the yield on the US 10-year Treasury, which lenders use to determine mortgage prices. From 3.62% in mid-September to 4.66% this week, the yield on the 10-year Treasury has increased.
The increase coincides with a steady rise in housing prices.
Many prospective homeowners have been unable to afford homeownership due to high mortgage rates and growing housing prices. The housing industry is still in a depression and is on track to have its worst year since 1995, even though sales of previously inhabited U.S. homes increased in November for the second consecutive month.
Later this month, the government will release its December home sales statistics.
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Average mortgage rate highest since July
Since the Federal Reserve indicated last month that it only plans to raise its benchmark rate twice this year—down from the four rate cuts it predicted in September—interest rates have started rising.
The Fed is holding off on rate decreases because, despite a decline from its mid-2022 peak, inflation is still persistently over the central bank’s 2% objective. Inflation may be exacerbated by President-elect Donald Trump’s economic plans, particularly his proposal to significantly raise import duties, according to economists.
Popular with homeowners looking to refinance, the average rate on a 15-year fixed-rate mortgage increased somewhat from 6.13% to 6.14%, the most since July. According to Freddie Mac, it was at 5.87% a year ago.
— The Associated Press’s Matt Ott
