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The
benchmark 30-year fixed rate loan rate rose to 6.91% from 6.85%
last week, according to mortgage giant Freddie Mac. It was at
6.62% a year ago.
The uptick in the cost of home loans reflects a rise in the
bond yields that lenders use as a guide to price mortgages. The
increase is occurring with the price of homes rising steadily.
The average rate on a 15-year fixed-rate mortgage, popular with
homeowners seeking to refinance, climbed to 6.13%, up from 6%
and also the highest since July. It was at 5.89% a year ago.
“Inching up to just shy of 7%, mortgage rates reached their
highest point in nearly six months,” said Freddie Mac chief
economist Sam Khater. “Compared to this time last year, rates
are elevated and the market’s affordability headwinds persist.
However, buyers appear to be more inclined to get off the
sidelines as pending home sales rise.”
Interest rates have been climbing since the Federal Reserve
signaled last month that it expects to raise its benchmark rate
just twice this year, down from the four cuts it forecast in
September.
The reason the Fed is tapping the brakes is that inflation
remains stubbornly above the cental bank's 2% target, even
though it’s fallen from the heights it reached in mid-2022.
Economists also worry that President-elect Donald Trump’s
economic policies, notably his plan to vastly increase tariffs
on imports, could fuel inflation.
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