WASHINGTON— The average rate on a 30-year mortgage ticked up for the second straight week last week following a string of declines that had many would-be homeowners counting on borrowing costs to continue to fall. But that hasn’t been the case.
The average long-term mortgage rate rose this week to 6.34% from 6.3% last week, mortgage buyer Freddie Mac said. A year ago, the rate averaged 6.12%.
Mortgage rates are influenced by several factors and are not, as many believe, driven by the Fed funds rate but instead by the trajectory of the 10-year Treasury yield.
The 10-year yield was at 4.10% at midday Thursday, down from 4.19% the same time last week. Much of that decline has come in the past few days, driven by discouraging reports on the U.S. economy, particularly the job market, analysts have noted.
In addition, the Fed remains concerned by lingering inflation, although President Trump is actively working to replace members of the Fed’s board of governors with people who will support his desire to see lower rates.
2024 2.0?
“The second straight bump in rates could signal a repeat of what happened last year after the Fed cut its benchmark rate for the first time in more than four years,” Yahoo Finance reported. “Back then, mortgage rates fell for several weeks prior to the Fed’s September rate cut. In the following weeks, however, mortgage rates began rising again, eventually reaching just above 7% in mid-January this year.
“Mortgage rates will have to sink below 6% to make refinancing an attractive option to a broader swath of homeowners, however. That’s because about 81% of U.S. homes have a mortgage with a rate of 6% or lower, according to Realtor.com,” the report added.
