Weekly Mortgage Rates Hit the Up Button One More Time

Oops, mortgage rates have once again caught everyone’s attention. After teasing below 6% in September, they have steadily increased for five consecutive weeks.

The average 30-year fixed-rate mortgage reached 6.6% in the week ending Oct. 24, marking a 14 basis point rise from the previous week. One basis point equals one one-hundredth of a percentage point.

Mortgage rates have been steadily climbing over the past five weeks since Sept. 19, when the 30-year mortgage was at 5.89%. Are mortgage rates playing mind games? Not really, as they tend to fluctuate based on economic indicators, dropping when the economy slows and rising when it picks up:

• In September, mortgage rates decreased in anticipation of the Federal Reserve cutting short-term interest rates. Lisa Sturtevant, chief economist at Bright MLS, noted “concerns about potential weakness in the labor market” as a contributing factor.

• However, mortgage rates reversed course in early October following the release of the September employment report, which showed stronger-than-expected job growth. The fear of escalating wages due to heightened job competition could impede inflation control, leading to the uptick in rates.

Housing experts emphasize that despite recent rate increases, mortgage rates have made significant strides. A year ago, the 30-year mortgage was at 7.95%, reflecting a decrease of 1.35 percentage points.

“Even with the recent uptick, rates are still more than a full percentage point lower than last year, which has encouraged some potential buyers to stay active in the market,” noted Joel Kan, deputy chief economist at the Mortgage Bankers Association.

However, the housing market is not without its challenges: Lower mortgage rates are offset by higher housing prices, deterring some prospective buyers. The median price of existing homes was $404,500 in September, a 3% increase from the previous year when the median price was below $400,000.

First-time home buyers accounted for only 26% of sales in September, indicating a struggle in the current market, according to Lawrence Yun, chief economist at NAR. “First-time buyers are facing challenges in the current landscape.”