Mortgage Rates in the U.S. Show Slight Decrease after Six-Week Climb
The average rate on a 30-year mortgage in the U.S. edged lower this week, ending a six-week climb. According to mortgage buyer Freddie Mac, the rate slipped to 6.78% from 6.79% last week. While this is still down from a year ago when the rate averaged 7.4%, it is a positive sign for potential homebuyers and refinancers.
Additionally, borrowing costs on 15-year fixed-rate mortgages, which are popular among homeowners seeking to refinance their home loan to a lower rate, also eased this week. The average rate slipped to 5.99% from 6% last week. A year ago, it averaged 6.76%, indicating a favorable trend in mortgage rates.
Mortgage rates are influenced by various factors, including the yield on U.S. 10-year Treasury bonds, which lenders use as a guide to price home loans. Recent reports on inflation and the economy have caused bond yields to rise in recent weeks, impacting mortgage rates accordingly.
One significant factor affecting bond yields and mortgage rates is the expectations surrounding President-elect Donald Trump’s plans to lower tax rates, increase tariffs, and reduce regulation. These policies could potentially lead to higher U.S. government debt and inflation, as well as faster economic growth, contributing to fluctuations in mortgage rates.
Despite the recent upward movement in bond yields, the average rate on a 30-year mortgage is still lower than its peak of 7.22% in May. In late September, the average rate reached as low as 6.08%, marking its lowest level in two years.
Economists predict that mortgage rates will continue to be volatile in the coming year, but overall, they forecast rates to hover around 6% in 2025. This projection provides some insight for individuals considering home purchases or refinancing options in the near future.
High mortgage rates and elevated home prices have contributed to a sales slump in the U.S. housing market since 2022. The combination of these factors has made it challenging for some buyers to enter the market or upgrade to a new home.
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Originally Published: November 15, 2024 at 6:50 PM MST
