Mortgage rates edge higher after four-week decline
The 30-year fixed-rate mortgage rises to 6.3% as markets weigh Fed policy and inflation; the 15-year rate climbs to 5.49%.
The average rate on a 30-year U.S. mortgage rose to 6.3% this week, ending a four-week decline that had brought borrowing costs to the lowest level in about a year. Freddie Mac said Thursday that the rate increased from 6.26% last week. A year ago, the rate averaged 6.08%. The rate on the 15-year fixed-rate mortgage rose to 5.49% from 5.41% a week earlier; a year ago, it was 5.16%.
Mortgage rates are influenced by several factors, from the Federal Reserve’s policy decisions to bond market investors’ expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which was 4.19% in midday trading Thursday, up from 4.16% late Wednesday.
Starting in late July, mortgage rates mostly declined in the lead-up to the Federal Reserve’s widely anticipated decision last week to cut its main rate for the first time in a year amid growing concern over the U.S. job market. The move, coupled with changes in bond markets, has kept mortgage costs directionally tied to the Fed’s policy stance and inflation expectations, leaving buyers navigating a volatile affordability landscape.
The housing market has been in a slump since 2022, when mortgage rates began climbing from historic lows. Sales of previously occupied homes sank last year to their lowest level in nearly 30 years. And, so far this year, sales are running below where they were at this time in 2024. The latest rate shift comes as investors monitor the Fed’s path of potential additional rate cuts and the broader inflation trajectory, both of which can influence mortgage pricing in the weeks ahead.
Like last year, the Fed’s rate cut doesn’t guarantee that mortgage rates will keep declining. After the Fed’s first-rate cut in more than four years in September 2024, rates fell for several weeks before resuming an upward move that pushed them above 7% in mid-January. Analysts caution that rate moves can be uneven, and lenders will continue to set pricing based on a mix of economic data and policy signals. As the central bank signals more potential cuts ahead, borrowers should prepare for continued volatility in mortgage costs, which can shift quickly with shifts in inflation readings, employment data, and expectations for future Fed actions.