US mortgage rates increase to highest level since July

(MENAFN) Mortgage rates in the U.S. have increased this week, reaching their highest levels since July. The rate for a 30-year fixed-rate loan climbed to 6.91 percent, up from 6.85 percent the previous week, according to Freddie Mac. This rate is also significantly higher than the 6.62 percent it stood at a year ago. The rise in mortgage rates is closely tied to an increase in bond yields, which lenders use to determine the prices of mortgages.

The 15-year fixed-rate mortgage, which is often favored by homeowners looking to refinance, also saw a rise, reaching 6.13 percent. This is an increase from the previous rate of 6 percent and marks the highest level since July. One year ago, the rate on a 15-year mortgage was at 5.89 percent, highlighting a notable jump over the past year.

The increase in mortgage rates is largely a result of the Federal Reserve's shift in its monetary policy outlook. Last month, the Fed indicated that it expects to raise its benchmark interest rate only twice in the coming year, a reduction from its previous expectation of four rate cuts announced in September. This shift is due to inflation still being above the central bank’s target of 2 percent.

Despite some decrease in inflation since its peak in mid-2022, it remains persistently high. Additionally, concerns about potential economic impacts from President-elect Donald Trump’s proposed economic policies, such as his plan to substantially increase tariffs on imports, have led to worries that inflation could be further fueled.

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