Mortgage rates increased for the fourth straight week, inching closer to 7%
The average 30-year mortgage rate was 6.93% in the week through Wednesday, according to Freddie Mac data, up from 6.91% a week earlier. Fifteen-year mortgage rates rose a single basis point to 6.14%, from 6.13%.
The latest jump comes after 10-year Treasury yields, which mirror mortgage rates, rose after new economic data released this week pointed to stickier inflation and more job openings — both factors that complicate the Fed’s rate-cutting path.
The sector of companies that provide services grew in December, and a measure of their costs rose to near a two-year high, according to the Institute for Supply Management. Meanwhile, job openings in industries across the US rose more than economists expected in November.
The data is the latest sign that the Federal Reserve may opt for fewer benchmark interest rate cuts this year. The Fed doesn’t directly control mortgage rates, but rates typically rise and fall in response to expectations about future central bank policy.
“The continued strength of the economy has put upward pressure on mortgage rates, and along with high home prices, continues to impact housing affordability,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
December jobs data released Friday will provide new information about the direction of interest rates going forward. A weaker payrolls report could strengthen the case for more Fed easing this year.
In response to higher rates, mortgage applications for new home purchases dropped 7% through Friday compared to a week earlier, according to the Mortgage Bankers Association. Refinancing applications rose 2%, though the increase was off of recent low levels, MBA’s Deputy Chief Economist Joel Kan said in a statement.
Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.