WASHINGTON — The average rate on a 30-year mortgage in the U.S. rose for the third straight week to its highest level since mid-July, reflecting a recent jump in the bond yields that lenders use as a guide to price home loans.
The rate rose to 6.85% from 6.72% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the rate on a 30-year mortgage averaged 6.61%.
The average rate on a 30-year mortgage is now the highest it’s been since the week of July 11, when it was at 6.89%. It dipped as low as 6.08% in September - a 2-year low - and as high as 7.22% in May,
Most economists forecast the average rate on a 30-year mortgage to remain above 6% next year, with some including an upper range as high as 6.8%. That range would be largely in line with where rates have hovered this year.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan at a lower rate, also rose this week. The average rate increased to 6% from 5.92% last week. A year ago, it averaged 5.93%, Freddie Mac said.
Elevated mortgage rates and rising home prices have kept homeownership out of reach of many would-be homebuyers. While sales of previously occupied U.S. homes rose in November for the second straight month, the housing market remains in a slump and on track for its worst year since 1995.
Mortgage rates are influenced by several factors, including the moves in the yield on U.S. 10-year Treasury bonds.
Bond yields climbed last week after the Federal Reserve signaled that it will likely deliver fewer cuts to rates next year than it forecast just a few months ago. While the central bank doesn’t set mortgage rates, its actions and the trajectory of inflation influence the moves in the 10-year Treasury yield.
The yield, which was below 3.7% as recently as September, was at 4.61% in midday trading Thursday.
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