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The average rate on a 30-year U.S. mortgage edged higher this week, although it remains near a relatively low point so far this year.
Mortgage buyer Freddie Mac said Thursday the increase pushed the average long-term mortgage rate to 6.22% from 6.19% last week. A year ago this rate was an average of 6.6%.
The cost of borrowing on a 15-year fixed-rate mortgage, which is popular with homeowners refinancing their home loans, also rose this week. The rate averaged 5.54%, up from 5.44% last week. A year ago, it averaged 5.84%, Freddie Mac said.
Mortgage rates are influenced by many factors, from the Federal Reserve’s interest rate policy decisions to bond market investors’ expectations of the economy and inflation. They typically follow a 10-year trajectory treasure The yield, which lenders use as a guide for pricing home loans.
The 10-year yield stood at 4.12% Thursday afternoon, slightly higher than a week earlier.
Mortgage rates rise one day later federal Reserve It cut its key interest rate for the third time this year and hinted that another cut could come in 2026.
The Fed does not set mortgage rates, so even when it cuts its short-term rates it does not mean that rates on home loans will fall.
That’s what happened last autumn when the central bank cut its key rate for the first time in more than four years. Instead of falling, mortgage rates rose, eventually reaching above 7% in January of this year. At the time, the 10-year Treasury yield was heading toward 5%.
Mortgage rates began falling this summer before the central bank cut rates in September, the first time in a year. The average rate on a 30-year mortgage dropped to 6.17% on Oct. 30, the lowest level in more than a year.
A decline in rates helped sales of pre-occupied U.S. homes increase in October on an annualized basis for the fourth consecutive month.
Still, affordability remains a challenge for many aspiring homeowners, especially first-time buyers who do not have the equity from an existing home to purchase a new home. Uncertainty over the economy and job market also has many potential buyers on the sidelines.
The overall decline in mortgage rates this fall has been a boon for homeowners looking to refinance their home loans at a lower rate.
According to the Mortgage Bankers Association, applications for mortgage refinance loans increased 14% last week compared to the previous week, and accounted for about 58% of all home loan applications. Applications for loans to buy homes increased by nearly 5%.
Economists generally forecast that the average rate on a 30-year mortgage will remain slightly above 6% next year.
“While this is unlikely to provide rapid relief to some buyers, rates are expected to remain so low that the imbalance will continue, with modest but modest increases in house prices,” he said. Anthony SmithSenior Economist at Realtor.com.