The 30-year fixed mortgage rate climbed again this week, marking the second consecutive weekly increase. So it went from 6.30% to 6.34%. This increase is a continuation of the trend of increasing and then decreasing mortgage rates that started with a drop around the last week of July. This increase comes on the heels of seismic shifts in the financial landscape. Significantly, this is the Federal Reserve’s first interest rate cut in a year.
In reaction to increasing fears about the state of the American job market, the Federal Reserve took its last rate cut. According to the Federal Reserve, this was done to increase economic activity by encouraging more borrowing and investment. Mortgage rates typically track the direction of the 10-year Treasury yield. This yield serves as a benchmark for mortgage lenders as they price long-term residential mortgages. As of midday Thursday, the 10-year yield was at 4.10%, down from 4.19% at this time last week.
Sure enough, mortgage rates have begun climbing again in the weeks since the Federal Reserve’s rate hike. This jump occurs despite the drop in the 10-year yield. This increase has resulted in mortgage rates climbing to above 7% in mid-January, putting a considerable burden on current homeowners and future homebuyers. Currently, roughly 81% of U.S. homes with a mortgage have a mortgage rate at 6% or below. Most existing owners are probably going to wait to refinance until those rates dip below 6%.
It’s important to remember that the current average rate on a 30-year mortgage sits at 6.34%. This figure is up from 6.12% only a year ago. But as it stands today, economists are forecasting the average one will stay around the mid-6% range for the foreseeable future — possibly even all […] Based on such forecasts, it seems we’re still in for plenty of housing market uncertainty and volatility.
What does the increase in rising mortgage rates mean for homeowners pursuing a refinance? With rates now above 6%, most existing homeowners will be less likely to want to refinance unless further rate drops make it worth their while. This scenario may further bring about a cooling in refinance activity, with the owners of mortgage-prone homes finding themselves unwilling to part with their current lower-rate mortgages.
