Mortgage rates increased for a fourth consecutive week as the average 30-year fixed mortgage rate reached 6.54% this week, up from 6.44% a week ago, according to Freddie Mac.
Mortgage rates had dropped to a low of 6.08% at the end of September. Mortgage rates are still lower than a year ago when the 30-year fixed mortgage rate was 7.79%.
Still, the trend comes nearly a month after the Federal Reserve reduced the federal interest rate by 0.5 basis points.
Thirty-year fixed mortgage rates have remained above 6% since September 2022 due in part to the Federal Reserve raising federal interest rates to combat high inflation. Fixed mortgage rates, although not directly tied to federal interest rates, can be influenced by the Federal Reserve's rates.
RELATED STORY | Baby boomers plan to keep their homes as they grow older, report shows
The Federal Reserve could lower interest rates again next month, which could help nudge mortgage rates back down again.
But experts say an improving economy along with election uncertainty could be driving up mortgage rates.
“The continued strength in the economy drove mortgage rates higher once again this week. 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,” said Sam Khater, Freddie Mac’s chief economist.
Redfin suggests that the election is influencing mortgage rates.
“Investors in the bond market are particularly worried about the possibility of increased government debt after the election,” Chen Zhao, Redfin’s economic research lead, said. “They’re concerned that one party could end up controlling both the White House and Congress, which would increase government spending more. That concern, along with strong economic data, is pushing up 10-year treasury yields and mortgage rates.”
RELATED STORY | Americans need more money to purchase a starter home, report says
While new home sales continue to increase, data from the National Association of Realtors show falling numbers of existing home sales. In September, 3.8 million existing homes were sold, which is down from 4 million homes sold in September 2023.
The average amount of time a home is on the market has increased by a week, Redfin said. Inventory has already increased as there are 15% more homes on the market than a year ago, Redfin says.
