Mortgage rates continued their upward trend, rising for the fifth time in six weeks and reaching their highest point since early August. The average rate on a 30-year fixed mortgage increased to 6.73% as of October 25, according to the Mortgage Bankers Association (MBA).
This marks a significant climb from the previous week’s 6.52% and is part of a nearly 60 basis point increase over the past month.
These higher rates have dampened refinancing activity, with applications for refinancing dropping 6.3%, reaching their lowest level since July.
Meanwhile, purchase applications saw a slight boost, rising 5% for the week, but optimism remains limited due to high mortgage rates and persistent home prices.
According to Freddie Mac, borrowing costs for 15-year fixed-rate mortgages, commonly chosen for refinancing, also increased to 5.99% from 5.71%.
Although these rates are lower than last year’s highs, the recent surge adds significant costs for potential buyers, limiting their purchasing power.
This rise in mortgage rates aligns with the bond market’s response to signs of steady economic growth and ongoing speculation over the Federal Reserve’s future interest rate decisions.
The yield on the 10-year Treasury, a benchmark for home loan rates, has climbed from 3.62% in mid-September to 4.30% this week, driven by economic data and inflation reports.
Despite the upward movement, experts like Freddie Mac’s chief economist Sam Khater suggest that rates might be peaking. “Although uncertainty will remain, it does appear mortgage rates are cresting, and we do not expect them to reach the highs seen earlier this year,” Khater noted.
While economists expect volatility in mortgage rates over the coming weeks—particularly with the October jobs report, the 2024 election, and a Federal Reserve policy meeting on the horizon—rates are projected to ease in 2025. A decline in rates could increase buyer affordability but may also fuel higher home prices if more buyers return to the market.