The average rate for a 30-year fixed mortgage has reached 6.89%. Although this is a 0.06 percentage point drop from the previous week, it remains close to 7%. This trend is attributed to the sustained rise in the 10-year Treasury yield, which influences mortgage rates, following signals from the Federal Reserve (Fed) that it may cut benchmark interest rates less than market expectations.

According to Freddie Mac, a government-sponsored mortgage company, the average rate for a 30-year fixed mortgage this week was 6.89%, down 0.06 percentage points from the previous week. However, this is still 0.25 percentage points higher than the same period last year (6.64%).

The 30-year mortgage rate had previously dropped to 6.08% in September last year, its lowest level in two years, after the Fed implemented a significant 0.5 percentage point rate cut.

Meanwhile, the 15-year fixed mortgage rate, popular among homeowners seeking to refinance at lower rates, fell to 6.05% this week, down 0.07 percentage points from the previous week (6.12%). A year ago, the 15-year fixed rate stood at 5.90%.

The housing market continues to struggle. Rising mortgage rates and increasing home prices have made potential buyers hesitant to enter the market. According to the National Association of Realtors (NAR), existing home sales in 2023 decreased by 0.7% compared to the previous year, totaling 4.06 million transactions. This is the lowest level since 1995, marking a 29-year low. In contrast, the median U.S. home price rose by 6% year-over-year to $404,400 as of December last year.

The surge in mortgage rates to the high 6% range is driven by expectations that the Fed will cut benchmark interest rates less aggressively this year, leading to higher bond yields. The 10-year Treasury yield has been climbing steadily, rising from a low of 3.61% on September 15 last year to 4.42% as of today.



<Hongyong Park>