Mortgage rates rose for the second week in a row, according to data released by Freddie Mac on Thursday. The average rate for a 30-year fixed mortgage climbed to 6.34%, up slightly from last week’s figure of 6.3%.
While still below the 52-week average of 6.71%, the latest increase marks a notable shift in borrowing costs. In comparison, the average rate on a 30-year loan was significantly lower at 6.12% just one year ago.
15-year mortgage rates also increase
The 15-year fixed mortgage rate also saw an uptick, rising to 5.55% from last week’s average of 5.49%. A year ago, this rate stood at 5.25%, underscoring the broader upward trend in borrowing rates.
Freddie Mac’s Chief Economist Sam Khater commented on the recent movement in rates, stating, "The 30-year fixed-rate mortgage increased again this week but remains below its 52-week average of 6.71%. The last few months have brought lower rates and as indicated by the recently reported increase in pending home sales, homebuyers are feeling more confident to get into the market."
Lower rates drive homebuyer confidence
Despite the recent increases, mortgage rates remain below their peak levels from earlier in the year, providing some relief for potential buyers. Data from the National Association of Realtors highlighted a 4% rise in pending home sales for August, reflecting renewed confidence among buyers. This increase surpassed analysts’ expectations of just a 0.2% uptick.
Economic factors influencing rates
Mortgage rates are closely tied to the performance of 10-year Treasury yields. According to Realtor.com’s senior economist Jiayi Xu, markets are currently navigating uncertainty stemming from recent economic developments. "The timing of this disruption is particularly sensitive, coming just after the Federal Reserve cut policy rates for the first time in nine months", Xu said.
She further noted, "The longer the shutdown drags on, the greater its potential influence on markets and monetary policy decisions will be." Xu also highlighted how growing uncertainty may cause prospective buyers to delay purchases, particularly in areas with a higher concentration of federal workers.
As the housing market continues to adjust to these fluctuations, all eyes remain on how these developments might shape home affordability and buyer activity in the months ahead.
