Due to a recent increase in bond yields, which lenders use as a guide for pricing house loans, the average rate on a 30-year mortgage in the United States increased this week to its highest level since late November.
Mortgage buyer Freddie Mac reported on Thursday that the rate increased from 6.6% to 6.72% from the previous week. The rate has increased from its average of 6.67% one year ago.
This week also saw an increase in the cost of borrowing for 15-year fixed-rate mortgages, which are common among homeowners looking to refinance their home loan to a lower rate. Last week, the average rate was 5.84%; this week, it was 5.92%. According to Freddie Mac, it averaged 5.95% a year ago.
The 30-year mortgage rate is currently at its highest level since November 27, when it was 6.81%.
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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.
Changes in the yield on U.S. 10-year Treasury bonds are one of the many factors that affect mortgage rates.
The Federal Reserve’s indication that it will probably make fewer rate cuts next year than it anticipated only a few months ago caused bond yields to soar on Wednesday. Although the central bank does not determine mortgage rates, changes in the 10-year Treasury yield are influenced by its operations as well as the direction of inflation.
As recently as September, the yield was below 3.7%; at lunchtime Thursday, it was at 4.56%.
— The Associated Press’s Alex Veiga
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