U.S. mortgage rates climbed to a fresh multi-month high this week, reaching their highest level since July. The 30-year fixed-rate mortgage averaged 6.93%, up from 6.91% the previous week, according to Freddie Mac.
Rising bond yields are driving the increase. The yield on the 10-year Treasury note has risen from 3.62% in September to 4.66% this week. This rise directly influences how lenders price mortgages.
The trend coincides with a persistent rise in home prices. While November home sales saw a positive uptick, the housing market continues to struggle, poised for its worst performance since 1995. This challenging environment further limits accessibility to homeownership.
The Federal Reserve's recent shift in expected interest rate hikes—from four cuts projected in September to just two this year—reflects persistent inflation, which remains above the central bank's 2% target, despite easing from its 2022 peak. Economists also express concern about potential inflation-inducing policies.
Finally, the 15-year fixed-rate mortgage rate also reached a new high for the year, at 6.14%, mirroring the 30-year trend.
