Mortgage rates move up, 30-year still below 7%

Mortgage rates edged higher this week, with the 30-year fixed rate drifting up to 6.94 percent, according to Bankrate’s latest lender survey. Meanwhile, the Federal Reserve last week announced another quarter-point cut, despite a higher-than-expected inflation reading last week.

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The 30-year fixed mortgages in this week’s survey had an average total of 0.25 discount and origination points. Discount points are a way for you to reduce your mortgage rate, while origination points are fees lenders charge to create, review and process your loan.

Experts tell us: Will mortgage rates go down this upcoming week?

The national median family income for 2024 is $97,800, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in November 2024 was $406,100, according to the National Association of Realtors. Based on a 20 percent down payment and a 6.94 percent mortgage rate, the monthly payment of $2,148 amounts to 26 percent of the typical family’s monthly income.

Fixed mortgage rates are not set directly by the Fed, but by investor appetite, particularly for 10-year Treasury bonds. The 30-year fixed-rate mortgage rate moves with the yield on 10-year Treasury bonds.

“The 30-year mortgage rates are tied to the 10-year Treasury bonds, and long-term Treasury bonds have been increasing. Therefore, residential loan rates haven’t been falling as much as people have expected,” says Calixto Garcia-Velez, president and CEO at BanescoUSA in Miami.

When there’s uncertainty in the market, investors buy Treasury bonds, which in turn drives yields — and, often, mortgage rates — downward. However, Treasury yields have been rising as inflation remains stubbornly persistent.

Meanwhile, housing economists and mortgage players have seized on a new narrative — that four more years of President-elect Donald Trump will mean ever-growing deficits, and that those deficits will put upward pressure on 10-year Treasury yields and, in turn, mortgage rates.

Then there’s the Federal Reserve. Lenders and mortgage investors had been anticipating the Fed’s rate cuts in September, November and December, and economic indicators such as hiring have shown signs of strength. Mortgage rates are up half a percentage point since the Fed’s September rate cut.

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