The 30-year fixed-rate mortgage (FRM) rose for a second consecutive week to 6.34% from 6.30%, according to Freddie Mac. That comes despite the Fed cutting rates by 25 bps last month and signaling lower rates in the coming months.
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At the same time, mortgage rates have still trended lower since June, reaching a year-to-date low of 6.26% on September 18. “The last few months have brought lower rates and as indicated by the recently reported increase in pending home sales, homebuyers are feeling more confident to get into the market,” said Freddie Mac.
Mortgage Rates Rise as the 10-Year Yield Whipsaws
Mortgage rates aren’t just tied to the federal funds rate. The 30-year FRM is driven primarily by long-term borrowing costs, such as the 10-year Treasury yield.
The 10-year yield has seen bumpy price action since the Fed cut rates on September 17, with investors uncertain about the risk of sticky inflation and the path of rates ahead. However, rate cut momentum has risen in recent days, with the market pricing in an 89.5% chance of two more rate cuts by year-end, according to CME’s FedWatch tool.
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