Prospective homebuyers waiting on the sidelines for a further drop in mortgage rates received unwelcome news on Thursday.
The average rate on a standard, 30-year fixed mortgage was 6.32% in the week ending October 10, mortgage financing provider Freddie Mac said Thursday. It was the largest one-week increase in mortgage rates since April and the second straight week rates jumped higher after falling to a two-year low last month.
Mortgage rates had been steadily trending downward since the spring. The Federal Reserve’s rate cut last month ignited hopes that mortgage rates would continue their downward trend. But a stronger-than-expected job report last week caused bond yields to jump. Mortgage rates track the benchmark 10-year Treasury yield.
“We should remember that the rise in rates is largely due to shifts in expectations and not the underlying economy, which has been strong for most of the year,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “Although higher rates make affordability more challenging, it shows the economic strength that should continue to support the recovery of the housing market.”
Last month, the Fed delivered its first rate cut since the start of the Covid-19 pandemic in 2020 and signaled more cuts are on the way. Soon after, the average rate on a 30-year fixed mortgage fell to its lowest since September 2022 at 6.08%.
The recent bounce in mortgage rates underscores the uneven path toward greater home affordability. Many US markets have been plagued by a shortage of homes, increasing competition and driving home prices to near-record highs.
Though mortgage rates remain above any level seen between 2008 and 2022, the average 30-year fixed rate is significantly below a two-decade peak of 7.79% reached last fall.
This is a developing story and will be updated.
