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The
benchmark 30-year fixed rate loan rate rose to 6.93% from 6.91%
last week, according to mortgage giant Freddie Mac. It was at
6.66% a year ago. It has risen for four straight weeks.
The uptick in the cost of home loans reflects a rise in the bond
yields that lenders use as a guide to price mortgages,
specifically the yield on the U.S. 10-year Treasury. The yield
on the 10-year Treasury has climbed from 3.62% in mid-September
to 4.66% this week.
The increase is occurring with the price of homes rising
steadily.
Elevated mortgage rates and rising home prices have kept
homeownership out of reach of many would-be homebuyers. While
sales of previously occupied U.S. homes rose in November for the
second straight month, the housing market remains in a slump and
on track for its worst year since 1995.
The government's report on December home sales is due out later
this month.
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 Fed is tapping the brakes on rate cuts because inflation
remains stubbornly above the central bank’s 2% target, even
though it’s fallen from its mid-2022 peak. Economists also worry
that President-elect Donald Trump’s economic policies, notably
his plan to vastly increase tariffs on imports, could fuel
inflation.
The average rate on a 15-year fixed-rate mortgage, popular with
homeowners seeking to refinance, ticked up to 6.14%, up from
6.13% and also the highest since July. It was at 5.87% a year
ago, Freddie Mac said.
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