This week, the average 30-year mortgage rate in the United States increased to its highest level since July, edging closer to 7%.
According to Freddie Mac, a mortgage buyer, the rate increased from 6.78% to 6.84% last week on Thursday. The rate is still lower than it was a year ago, when it averaged 7.29%.
This week also saw a slight increase in borrowing prices for 15-year fixed-rate mortgages, which are popular among homeowners looking to refinance their home loan to a lower rate. Last week, the average rate increased from 5.99% to 6.02%. According to Freddie Mac, it averaged 6.67% a year ago.
Even if U.S. home sales are on track for their worst year since 1995, rising mortgage rates can boost borrowers’ monthly expenses by hundreds of dollars, lowering their purchasing power at a time when home prices are still close to all-time highs.
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Following changes in the 10-year Treasury yield, which lenders use to determine how much to charge for house loans, the average rate on a 30-year mortgage has been largely rising since late September, when it dropped to a two-year low of 6.08%.
The yield, which was below 3.70% in September and has primarily been at 4.4% since last week, has been increasing in recent weeks in response to conflicting data on the economy and inflation. Additionally, it soared following the election, indicating investor expectations that President-elect Donald Trump’s economic plans would increase inflation and the government deficit.
Since July 11, when it was 6.89%, the average rate on a 30-year home loan has not been this high. The average rate is still below its peak of 7.22% in May of this year, even with its most recent increase.
Although mortgage rates are expected to remain unstable this year, economists anticipate that they will normally linger around 6% in 2025.
— The Associated Press’s Alex Veiga
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