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U.S. mortgage rates increased for the second consecutive week, though they remain just above their lowest point in more than three years, according to data released Thursday by Freddie Mac.
The benchmark 30-year fixed-rate mortgage rose slightly to 6.1% from 6.09% the previous week. This represents a significant drop from a year ago, when the average rate stood at 6.95%. Similarly, the popular 15-year fixed-rate mortgage, often used for refinancing, inched up to 5.49% from 5.44%, well below the 6.12% recorded during the same period last year.
The modest increase follows the Federal Reserve’s decision Wednesday to pause its interest rate cuts after implementing three consecutive reductions during the latter part of 2025. While the central bank doesn’t directly set mortgage rates, its monetary policy decisions significantly influence bond investors whose actions ultimately affect mortgage pricing.
Mortgage rates typically follow the trajectory of 10-year Treasury yields, which serve as a benchmark for lenders when pricing home loans. The 10-year Treasury yield held steady at 4.24% as of Thursday midday, nearly unchanged from a week earlier.
Recent geopolitical tensions have also contributed to upward pressure on the bond market, pushing mortgage rates higher over the past few weeks despite the Fed’s overall accommodative stance.
The U.S. housing market has been navigating challenging conditions since 2022, when mortgage rates began climbing from their pandemic-era lows. This rate increase, combined with years of escalating home prices and a persistent nationwide housing shortage stemming from more than a decade of below-average construction, has created significant affordability barriers for potential homebuyers.
As a result, sales of previously owned homes remained at 30-year lows throughout much of last year. However, the gradual decline in mortgage rates that began in late summer 2023 provided some relief to the market, with existing home sales jumping 5.1% month-over-month in December.
The latest uptick in rates has already dampened mortgage application activity. According to the Mortgage Bankers Association, overall mortgage applications fell 8.5% last week compared to the previous week. Refinancing applications saw a particularly sharp decline of 16%, though they still accounted for more than half (56.2%) of all home loan applications. Purchase applications remained relatively stable with only a modest 0.4% decrease.
Industry economists generally project further easing of mortgage rates throughout the year, though most forecasts suggest the average 30-year mortgage rate will remain above 6%—approximately double what it was six years ago.
The current rate environment presents a significant disincentive for existing homeowners to enter the market. Nearly 69% of U.S. homes with outstanding mortgages have fixed rates of 5% or lower, and slightly more than half enjoy rates at or below 4%, according to data from Realtor.com. This rate disparity has contributed to the ongoing inventory shortage, as homeowners remain reluctant to give up their favorable financing terms.
“While slightly better rates have supported modest increases in sales and helped temper affordability pressures, the recovery is expected to be slow and uneven until rates move significantly lower and inventory expands further,” said Jiayi Xu, economist at Realtor.com.
The housing market’s recovery largely hinges on the continuation of the downward trend in mortgage rates and an increase in available housing stock. Until these conditions materialize, industry experts anticipate that the market will continue to face headwinds, particularly for first-time homebuyers and those looking to move up in highly competitive markets.
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16 Comments
The 30-year fixed mortgage rate ticking up slightly to 6.1% is still quite low compared to historical averages. It will be important to monitor how this affects affordability for potential homebuyers.
You make a good point. Even a small increase in rates can price some buyers out of the market, especially with home prices still relatively high in many areas.
I’m curious to see if the Fed’s decision to pause rate cuts will put upward pressure on mortgage rates in the coming months. That could be a headwind for the housing sector.
That’s a fair observation. The interplay between Fed policy, Treasury yields, and mortgage rates will be an important dynamic to follow.
The year-over-year decline in mortgage rates, from 6.95% to 6.1%, is certainly a positive development for prospective homebuyers. But affordability challenges still remain a concern in many markets.
That’s a good point. Even with lower rates, home prices in many areas may still be out of reach for many first-time and lower-income buyers.
With the 10-year Treasury yield holding steady, it’s not surprising to see mortgage rates also staying in a relatively narrow range. However, any significant shift in bond market sentiment could quickly change the mortgage rate landscape.
Absolutely, the 10-year Treasury is a key benchmark for mortgage pricing, so continued stability there has helped maintain the low rate environment so far.
It will be interesting to see if the modest uptick in mortgage rates prompts any shift in homebuyer behavior or housing market dynamics in the coming months. The broader economic landscape remains a key factor to watch.
Absolutely, the interplay between mortgage rates, home prices, and broader economic conditions will be crucial in determining the trajectory of the housing market.
The steady 10-year Treasury yield and modest uptick in mortgage rates suggest a stabilizing mortgage market, but the broader economic outlook remains uncertain. Homebuyers and lenders will need to stay vigilant.
Well said. Maintaining flexibility and closely monitoring the evolving economic and policy landscape will be crucial for all stakeholders in the housing sector.
While the current mortgage rate environment is still relatively favorable, the potential for future rate hikes by the Fed could present challenges for the housing sector. Careful monitoring of these developments will be important.
That’s a fair assessment. The housing market’s performance will likely depend heavily on how the Fed navigates its monetary policy in the months ahead.
Interesting to see mortgage rates still hovering near their lowest point in over 3 years, despite the Fed’s recent rate hike pause. I wonder how this will impact the housing market going forward.
Agreed, the continued low rates could provide some stability and renewed buyer interest in the housing market.