After six weeks of declines, mortgage rates have edged higher, but buyers haven’t been deterred — yet.
The 30-year, fixed-rate mortgage, a common loan choice for homebuyers, averaged 6.12% as of Sept. 26. That’s lower than the previous week’s average of 6.08%, and it’s more than a full percentage point lower than the comparable week this time last year when it stood at 7.49%, the mortgage giant said Thursday. It’s the first time the average has increased since the week of Aug. 15.
The 15-year, fixed-rate mortgage, another common loan option for homebuyers, also inched up, averaging 5.25%. That’s higher than last week when it stood at 5.16%, but it’s lower than a year earlier when it was 6.78%.
Daily mortgage rates, often more volatile than weekly averages, had increased slightly compared to the previous day as of Thursday afternoon.
The 30-year, fixed-rate mortgage stood at 6.25%, according to Mortgage News Daily, while the 15-year, fixed-rate mortgage stood at 5.62%.
That means that if a borrower took out a 30-year, fixed-rate mortgage for a $250,000 mortgage on Thursday, their monthly payment would be around $1,539.
The upward shift comes amid an escalation in conflict in the Middle East and ahead of government data about U.S. employment that’s set to be released Friday. It’s a dataset that will play a role in the Federal Reserve’s decision to lower interest rates further, or keep them where they are. That decision could impact shifts in the mortgage rates.
“The decline in mortgage rates has stalled due to a mix of escalating geopolitical tensions and a rebound in short-term rates that indicate the market’s enthusiasm on rate cuts was premature,” Freddie Mac’s Chief Economist Sam Khater said in a statement.
Positive outlook
But despite the uncertainty around the jobs report and even as daily rates are nearing one-month highs, they’re “still pretty great,” according to Matthew Graham, chief operating officer at Mortgage News Daily.
“Mortgage rates are still a far cry from the levels seen during the first few days of September,” he wrote in a post Wednesday. “The market has already adjusted to everything that can be known about the future. All we know is that volatility potential is elevated significantly heading into the end of the week.”
And more homebuyers have been entering the housing market or refinancing their existing mortgages, lured by decreases in mortgage rates, especially compared to the same time a year earlier, according to data from the Mortgage Bankers Association.
Compared to a year earlier, refinance activity was up 186% in the week ended Sept. 27 while purchase activity was up 9%. It’s a sign of a shift in the market, Mike Fratantoni, the industry group’s chief economist, said in a statement.
“The news for the week was that more homebuyers appear to be entering the market,” he said. “Inventories of both new and existing homes have been increasing over the course of 2024, meaning that potential buyers have properties to look at and now have somewhat lower mortgage rates leading to better affordability.
And it’s a trend that’s expected to continue through the end of the year, according to Khater.
“Zooming out to the bigger picture, mortgage rates have declined one and a half percentage points over the last 12 months, home price growth is slowing, inventory is increasing, and incomes continue to rise,” he said. “As a result, the backdrop for homebuyers this fall is improving and should continue through the rest of the year.”