US Mortgage Rates Rise to 6.34%, Pressuring Housing Market/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. mortgage rates rose for the second consecutive week, reaching 6.34% on a 30-year loan, according to Freddie Mac. The increase follows a summer of easing rates driven by weaker economic signals and the Fed’s first rate cut in over a year. Experts say borrowing costs are likely to stay in the mid-6% range through 2025, keeping homebuyers and refinancers cautious.
Quick Look: Mortgage Rate Trends
- 30-year fixed: 6.34% (up from 6.3% last week, 6.12% a year ago)
- 15-year fixed: 5.55% (up from 5.49% last week, 5.25% a year ago)
- Treasury link: Rates track the 10-year Treasury yield, now at 4.10%.
- Fed impact: First rate cut in a year hasn’t produced lasting mortgage relief.
- Housing slump: Home sales still near 30-year lows, with refinancing limited.
- Outlook: Economists expect rates to hover in the mid-6% range this year.
Deep Look: Why Mortgage Rates Are Rising Again
WASHINGTON — After weeks of decline that briefly energized the housing market, U.S. mortgage rates ticked upward for the second straight week, signaling more headwinds for buyers and homeowners.
Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage climbed to 6.34% from 6.3% a week earlier. One year ago, the benchmark rate stood at 6.12%.
What’s Driving the Increase?
Mortgage rates closely follow the performance of the 10-year Treasury yield, which lenders use to price long-term loans. Despite recent signs of weakness in the U.S. economy, the 10-year yield remains elevated, slipping only modestly to 4.10% this week from 4.19% last week.
Economic uncertainty and Federal Reserve policy remain the biggest factors. In late summer, mortgage rates began to fall as markets anticipated the Fed’s first interest rate cut in more than a year. The central bank delivered, lowering its benchmark in September amid signs of a cooling job market.
But Fed Chair Jerome Powell has since tempered expectations for rapid rate reductions, saying the central bank will proceed cautiously. That stance contrasts with some Trump-appointed members of the Fed who are urging steeper, quicker cuts.
Housing Market Still Struggling
The housing market has been stuck in a slump since 2022, when rates began to climb from record lows. By the end of 2024, sales of existing homes had plunged to their lowest level in nearly three decades.
So far this year, sales remain weaker than last year’s already depressed levels. Rising borrowing costs are discouraging new buyers, while most existing homeowners are locked into lower mortgages. Realtor.com estimates that 81% of U.S. homeowners already have a mortgage rate at or below 6%.
That means refinancing won’t make sense for most households unless rates dip significantly below 6%.
A Familiar Pattern
The current uptick in rates mirrors what happened last year. After a period of steady declines ahead of the Fed’s rate cut in September 2024, mortgage rates quickly climbed again, peaking above 7% by January 2025.
This cycle highlights the gap between Fed policy and real-world mortgage rates: a central bank rate cut doesn’t guarantee lower mortgage costs.
Refinancing and 15-Year Loans
Some homeowners who purchased at peak rates in recent years have been able to refinance, locking in lower payments. But with rates hovering above 6%, refinancing opportunities remain limited.
The 15-year fixed-rate mortgage, popular for refinancing, also rose this week — moving to 5.55% from 5.49% last week. A year ago, that rate averaged 5.25%.
What’s Next?
Economists expect mortgage rates to stay in the mid-6% range through 2025, barring major shifts in inflation or the labor market.
Still, if rates slip closer to or below 6%, demand for refinancing could surge, giving some relief to homeowners squeezed by higher borrowing costs.
Until then, the combination of elevated rates, cautious Fed policy, and affordability pressures suggests the housing market will remain stuck in its long slump.
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