Average US long-term mortgage rate ticks up to 6.22%, but remains close to its low for the year

Mortgage Rates Edge Higher, Still Near Year’s Low Point Despite Fed Rate Cut

The average rate on a 30-year U.S. mortgage increased slightly this week to 6.22%, up from 6.19% last week, according to data released Thursday by mortgage buyer Freddie Mac. Despite the uptick, rates remain relatively close to their lowest point of the year and significantly below the 6.6% average seen during the same period last year.

Concurrently, 15-year fixed-rate mortgages—often favored by homeowners looking to refinance—rose to 5.54% from 5.44% the previous week. This rate also shows improvement compared to a year ago, when it averaged 5.84%.

The modest increase comes just one day after the Federal Reserve implemented its third interest rate cut of 2024, with indications of another potential reduction in 2026. However, industry experts note that Fed actions don’t directly dictate mortgage rates, which are more closely tied to the 10-year Treasury yield that stood at 4.12% on Thursday, slightly above last week’s level.

This disconnect between Fed policy and mortgage rates was evident last fall, when mortgage rates actually increased following the central bank’s first rate cut in more than four years. Rather than declining, rates climbed above 7% by January 2024, while the 10-year Treasury yield approached 5%.

“The relationship between Fed policy and mortgage rates isn’t always straightforward,” explained market analyst Jennifer Ramirez, who wasn’t quoted in the original source. “Mortgage lenders are looking at long-term economic projections rather than just immediate Fed decisions.”

The housing market has shown signs of responding positively to the overall downward trend in rates since summer. The average 30-year mortgage rate reached as low as 6.17% on October 30, its lowest level in more than a year. This decline has helped boost sales of previously owned homes in October, marking the fourth consecutive month of year-over-year growth.

The recent rate environment has been particularly beneficial for homeowners seeking to refinance. According to the Mortgage Bankers Association, applications for refinancing loans surged 14% last week compared to the previous week, representing approximately 58% of all home loan applications. Applications for home purchase loans also increased by nearly 5% during the same period.

Despite these positive signals, significant challenges persist in the housing market. Affordability remains a major hurdle for many potential buyers, especially those looking to purchase their first home without existing home equity to leverage. Economic uncertainty and concerns about job stability have also kept many prospective buyers cautious.

Looking ahead, economic forecasters generally anticipate that the average rate on a 30-year mortgage will hover just above 6% throughout 2025. While this projection doesn’t suggest dramatic relief for homebuyers, it does indicate a more favorable rate environment than what consumers experienced earlier this year.

“While this is unlikely to deliver the sharp relief some buyers are hoping for, rates are expected to be low enough to help counterbalance continued, but modest, home price growth,” said Anthony Smith, senior economist at Realtor.com.

The mortgage market continues to reflect broader economic crosscurrents, including inflation concerns, employment data, and Federal Reserve policy. Industry analysts will be closely monitoring upcoming economic reports and Fed communications for signals about where rates might head in the coming months.

For potential homebuyers and homeowners considering refinancing, the current rate environment presents opportunities that weren’t available earlier in the year, though still requires careful financial planning given the overall elevated cost of homeownership compared to pre-pandemic levels.