Average rate on a 30-year mortgage in the US rises again to highest level in nearly 3 months

The average rate on a 30-year mortgage in the U.S. rose again this week, reaching its highest level in nearly three months.

The rate rose to 6.54% from 6.44% last week, mortgage buyer Freddie Mac said Thursday. Despite the recent uptick, the average rate is down from a year ago, when it climbed to a 23-year high of 7.79%.

When mortgage rates increase they can add hundreds of dollars a month in costs for borrowers. The average rate has now risen four weeks in a row. It hasn’t been this high since August 1, when it was 6.73%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also increased this week. The average rate rose to 5.71% from 5.63% last week. A year ago, it averaged 7.03%, Freddie Mac said.

Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions and data on inflation and the economy. That can move the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

Four weeks ago, the average rate on a 30-year mortgage slipped to 6.08% — its lowest level in two years — after the Federal Reserve cut its main interest rate for the first time in more than four years and signaled further cuts through 2026. While the central bank doesn’t set mortgage rates, its policy pivot cleared a path for mortgage rates to generally go lower.

However, Treasury yields have pushed higher in recent weeks following reports showing the U.S. economy remains stronger than expected. The yield on the 10-year Treasury was at 4.20% Thursday afternoon. It was at 3.62% in mid-September, just days before the Fed's rate cut.

“The continued strength in the economy drove mortgage rates higher once again this week,” said Sam Khater, Freddie Mac’s chief economist. “Over the last few years, there has been a tension between downbeat economic narrative and incoming economic data stronger than that narrative. This has led to higher-than-normal volatility in mortgage rates, despite a strengthening economy.”

The latest increase in mortgage rates is a setback for prospective homebuyers, as it reduces their purchasing power at a time when home prices remain near record highs despite a housing market slump dating back to 2022.

Sales of previously occupied U.S. homes slowed in September to the weakest annual pace in nearly 14 years even as mortgage rates eased. Sales of new homes, meanwhile, rose nationally in September by 6.3% from a year earlier, the U.S. Census Bureau reported Thursday. Homebuilders have lowered prices and offered incentives like paying to lower the rate on home loans to mitigate the impact of elevated mortgage rates.

Economists generally expect mortgage rates to remain near their current levels, at least this year. Fannie Mae projects the rate on a 30-year mortgage will average 6.2% in the October-December quarter and decline to an average of 5.7% in the same quarter next year.

"The big picture is for mortgage rates to fall over the coming months though in the short-term it is very likely for rates to move up and down,” said Lisa Sturtevant, chief economist at Bright MLS.