Average Rate for 30-Year Mortgage Increases for Fifth Straight Week

The average rate for a 30-year mortgage has increased for the fifth straight week, returning to its highest level in roughly two months.

Mortgage buyer Freddie Mac said Thursday that the 30-year mortgage rate climbed to 6.72 percent this week from 6.54 percent last week. The 6.72 percent average rate is still down from the 7.76 percent average rate a year prior.

Borrowing costs on 15-year fixed-rate mortgages also increased to 5.99 percent this week from 5.71 percent last week. This rate averaged 7.03 percent a year earlier.

How Have Mortgage Rates Changed This Year?

The last time the average 30-year mortgage rate was this high was August 1 when it was 6.73 percent.

Mortgage rates on a 30-year home loan have fluctuated throughout the year, reaching a peak of 7.22 percent in May. In late September, the average rate dipped to 6.08 percent, the lowest level in two years.

What Will Mortgage Rates Look Like in the Future?

Economists predict that mortgage rates will continue to fluctuate for the remainder of the year. They do, however, generally predict that rates will ease in 2025.

Some factors like the Labor Department’s jobs report for October, which will come out Friday, and the November 5 election will maintain a volatile environment for home loans.

“With several potential inflection points happening over the next week, including the jobs report, the 2024 election, and the Federal Reserve interest rate decision, we can expect mortgage rates to remain volatile,” said Sam Khater, Freddie Mac’s chief economist.

Khater added: “Although uncertainty will remain, it does appear mortgage rates are cresting, and we do not expect them to reach the highs that we saw earlier this year.”

Hope for Home Buyers

There is hope for prospective home buyers after the Federal Reserve lowered its benchmark interest rate, which was at a 23-year high, by a half-percentage point to between 4.75 and 5 percent in September.

The Fed raised its benchmark rate, the federal funds rate, 11 times in 2022 and 2023 to curb high inflation, which hit both the United States and countries around the world after the pandemic. September’s interest rate cut was the first in four years.

The federal funds rate is the target interest rate at which commercial banks borrow and lend their extra reserves to one another overnight. While the Fed doesn’t control mortgage rates, if the federal funds rate continues to decrease, the cost of consumer borrowing—including mortgages, auto loans and credit cards—should go down over time.

Economists expect the Fed to cut its benchmark rate by a quarter-point when it meets next week.

This article includes reporting from The Associated Press.