The average interest rate on a 30-year mortgage in the United States rose this week to just over 7%, the highest level in eight months.
Mortgage buyer Freddie Mac said Thursday that the rate rose to 7.04% from 6.93% last week. A year ago, its average was 6.6%. It has risen for five consecutive weeks.
Borrowing costs on 15-year fixed-rate mortgages, which are popular with homeowners seeking to refinance their home loans at a lower rate, also rose this week. The average rate rose to 6.27% from 6.14% last week. A year ago, it averaged 5.76%, Freddie Mac said.
The rise in the cost of home loans reflects a rise in bond yields that lenders use as a guide for pricing mortgages, specifically the yield on 10-year US Treasury bonds. The yield on the 10-year Treasury note rose from 3.62% in mid-September to 4.61% as of midday Thursday.
High mortgage rates, which can add hundreds of dollars a month to costs for borrowers, have discouraged home shoppers, prolonging a nationwide home sales decline that began in 2022.
while US previously occupied home sales rose in November For the second month in a row, the housing market was on track to end 2024 as the worst year for sales since 1995. Full-year home sales data is due next week.
The average interest rate on a 30-year mortgage is now the highest since May 9, when it stood at 7.09%.
Interest rates have been rising since the Fed indicated last month that it expects to raise its key rate just twice this year, down from the four cuts it expected in September.
The Fed is pressing interest rate cuts because inflation remains stubbornly above the central bank’s 2% target, despite falling from its peak in mid-2022. Economists are also concerned that President-elect Donald Trump’s economic policies, particularly his plan to increase… High import tariffs can lead to increased inflation.