The average 30-year mortgage rate in the United States has surged to a high not seen since November, driven by a rise in bond yields that guide lender pricing strategies.
The latest data from Freddie Mac indicates an increase in the average rate for 30-year mortgages to 6.72%, up from 6.6% last week. This marks a significant rise from a year ago when the rate was slightly lower at 6.67%. Similarly, 15-year fixed-rate mortgages saw an uptick, with the average rate climbing to 5.92% from 5.84% the previous week. A year earlier, this rate stood at 5.95%. Such movements in rates are reflective of changes in the bond market, where yields have recently been on the rise.
The elevated mortgage rates, coupled with increasing home prices, continue to present challenges for potential homebuyers. Although there was a rise in sales of previously occupied homes in November for the second consecutive month, the housing market remains sluggish, and projections suggest it may face its toughest year since 1995.
Several factors influence these mortgage rate shifts, primarily the movements of the U.S. 10-year Treasury bond yields. On Wednesday, bond yields jumped following signals from the Federal Reserve regarding fewer anticipated interest rate cuts in the coming year compared to earlier predictions. While the Federal Reserve does not set mortgage rates directly, its policies and the general trend of inflation can heavily influence the 10-year Treasury yield’s trajectory. As of midday Thursday, the yield had risen to 4.56%, having been below 3.7% as recently as September.
The increase in mortgage rates reflects broader economic trends influenced by bond market dynamics and Federal Reserve policies. Potential homeowners and industry stakeholders continue to face a challenging market environment characterized by rising costs and limited affordability.
Source: Floridarealtors
