Due to a recent spike in bond yields, which lenders use as a guide for pricing house loans, the average rate on a 30-year mortgage in the United States increased for the third consecutive week to its highest level since mid-July.
Mortgage buyer Freddie Mac reported the rate increased to 6.85% from 6.72% the previous week on Thursday. The average 30-year mortgage rate was 6.61% a year ago.
A 30-year mortgage’s average rate is currently at its highest level since the week of July 11, when it was 6.89%. It fell to a two-year low of 6.08% in September and reached a peak of 7.22% in May.
The majority of analysts predict that the average 30-year mortgage rate will stay above 6% in the upcoming year, with some even predicting an upper range of 6.8%. That range would roughly correspond to the range of rates this year.
This week also saw an increase in the cost of borrowing for 15-year fixed-rate mortgages, which are common among homeowners looking to refinance their house loan at a cheaper rate. From 5.92% the previous week, the average rate rose to 6%. According to Freddie Mac, it averaged 5.93% a year ago.
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Many prospective homeowners have been unable to afford homeownership due to high mortgage rates and growing housing prices. The housing industry is still in a depression and is on track to have its worst year since 1995, even though sales of previously inhabited U.S. homes increased in November for the second consecutive month.
Changes in the yield on U.S. 10-year Treasury bonds are one of the many factors that affect mortgage rates.
After the Federal Reserve indicated last week that it will probably make fewer rate cuts next year than it had predicted only a few months prior, bond yields increased. Although the central bank does not determine mortgage rates, changes in the 10-year Treasury yield are influenced by its operations as well as the direction of inflation.
As recently as September, the yield was below 3.7%; at lunchtime Thursday, it was at 4.61%.
— The Associated Press’s Matt Ott
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