Here’s why mortgage rates are rising after the Fed’s rate cut
CNN
US mortgage rates rose again this week, the fourth-straight weekly increase. That rise in borrowing costs has undone some of the relief Americans felt this summer when mortgage rates fell in anticipation of a rate cut from the Federal Reserve as inflation improved.
US mortgage rates rose again this week, the fourth-straight weekly increase. That rise in borrowing costs has undone some of the relief Americans felt this summer when mortgage rates fell in anticipation of a rate cut from the Federal Reserve as inflation improved. The average rate on a standard, 30-year fixed mortgage was 6.54% in the week ending October 24, according to a survey of lenders by Freddie Mac released Thursday. That’s the highest level since early August, but still below this year’s high of 7.22% seen in early May. Expectations of a Fed rate cut caused mortgage rates to drop to a two-year low of 6.08% in late September, but it failed to spur homebuying activity. Sales of previously owned homes, which make up the vast majority of the market, fell 1% in September from the prior month to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday, the lowest rate since October 2010. Mortgage applications have also declined over the past four weeks, falling to the lowest level since July, according to a separate report from the Mortgage Bankers Association out Thursday. Sluggish housing demand could be because lower rates came too late for the majority of home seekers: Many families prefer to buy and sell homes in spring, when the weather is warmer and they can plan ahead for the new school year. Prospective buyers might also be waiting on rates to come even lower, since the Fed has made it clear it will continue to pare back borrowing costs through 2025. Every percentage point on a mortgage rate makes a big difference for that monthly payment. But a persistent lack of homes on the market is continuing to push up home prices, which climbed in September for the 15th consecutive month, according to NAR data — on top of skyrocketing home insurance costs in some markets. Here’s what’s driving the recent upswing in mortgage rates.
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