Mortgage rates inch higher but remain near 2025 low – Daily Journal of Commerce

The average rate for a 30-year U.S. mortgage edged higher for the third week in a row, though it remains close to its low point in 2025.

The average long-term mortgage rate ticked up to 6.26 percent last week from 6.24 percent the week before, mortgage buyer Freddie Mac stated. A year ago, the rate averaged 6.84 percent.

Four weeks ago, the average rate was at 6.17 percent — the lowest level in more than a year.

Borrowing costs for 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also inched up last week. The rate averaged 5.54 percent, up from 5.49 percent the week before. A year ago, it was 6.02 percent, according to Freddie Mac.

When mortgage rates rise, they reduce homebuyers’ purchasing power. The average rate for a 30-year mortgage has been stuck above 6 percent since September 2022, the year mortgage rates began climbing from historic lows.

That’s helped kept sales of previously occupied U.S. homes stuck at around a 4 million annual pace going back to 2023. Historically, sales have typically hovered around 5.2 million a year.

While sales have been sluggish this year, they received a boost this fall as mortgage rates eased. The average rate for a 30-year home loan has stayed below 6.4 percent since early September. Last month, home sales accelerated to their fastest pace since February.

Mortgage rates are influenced by several factors, from the Federal Reserve‘s interest rate policy decisions to bond market investors’ expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide for pricing home loans.

The 10-year yield was at 4.10 percent at midday on Nov. 20. That’s down slightly from two weeks ago, but up from around 3.95 percent on Oct. 22.

Mortgage rates began declining this past summer ahead of the Federal Reserve’s decision in September to cut its main interest rate for the first time in a year amid signs the labor market was slowing. The Fed lowered its key interest rate again last month, although Fed Chair Jerome Powell cautioned that further rate cuts weren’t guaranteed.

Wall Street traders have reduced their bets that the Fed will cut its main interest rate at its next meeting in December, now giving it a roughly 44 percent probability, according to data from CME Group. That’s down from nearly 70 percent a few weeks ago, but better than the 30 percent chance before the release of the delayed September jobs report.

The central bank doesn’t set mortgage rates, and even when it cuts its short-term rates that doesn’t necessarily mean rates on home loans will necessarily decline.

Last fall, after the Fed cut its rate for the first time in more than four years, mortgage rates marched higher, eventually reaching just above 7 percent in January this year. At that time, the 10-year Treasury yield was climbing toward 5 percent.

Recent forecasts by economists at the National Association of Realtors and First American call for the average rate for a 30-year mortgage to drop to around 6 percent next year.