Home loan interest rates experienced a modest uptick this week, echoing a surge in Treasury yields that serve as a benchmark. As of Thursday, the average 30-year fixed-rate mortgage climbed to 6.12%, up from a two-year low of 6.08% just a week prior, according to data from Freddie Mac. Meanwhile, 15-year mortgages saw an average rate of 5.25%, a slight increase from 5.16% during the same period last week. This shift is attributed to the rise in 10-year Treasury yields, which mortgage rates closely follow, as investors assess the economy’s health and escalating tensions in the Middle East. According to Sam Khater, chief economist at Freddie Mac, “The downward trend in mortgage rates has stalled due to a mix of rising geopolitical tensions and a rebound in short-term rates, indicating the market’s enthusiasm for rate cuts was premature.” Despite rates lingering above 6%, prospective homebuyers are cautiously entering the market. Mortgage applications to purchase a home saw a 1% weekly increase through September 27, according to the Mortgage Bankers Association, and are up 9% compared to the same period last year. Odeta Kushi, deputy chief economist at First American Financial Corporation, notes that if mortgage rates remain elevated, people will adjust their expectations to 6% rather than 4%. However, significant life events will continue to drive homebuying and selling decisions. Refinancing activity, although slightly down from the previous week, remains nearly three times higher than a year ago. The more than 1 percentage point drop in mortgage rates since May has prompted many homeowners who purchased in the last year to refinance and lower their payments.
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