Highlights:
The average 30-year mortgage rose to 6.93%, marking the fourth consecutive weekly increase.
Economic data showing strong job openings and continued inflationary pressures are contributing to rising rates.
Key background:
Mortgage rates rose for the fourth week in a row, with the 30-year average reaching 6.93% for the week ending January 9, 2025, according to data from Freddie Mac. This marks a slight increase compared to the previous week of 6.91%. Similarly, 15-year mortgage rates saw a slight increase, from 6.13% to 6.14%.
The increase in mortgage rates follows new economic data revealing continued inflation and an unexpected increase in job openings, both of which complicate the Federal Reserve’s expected rate-cutting approach. The 10-year Treasury yield, which is often linked to mortgage rates, also rose after the data was released, suggesting the Fed may hold on to aggressive interest rate cuts.
December data from the Institute for Supply Management highlighted growth in the services sector, with spending rising to a nearly two-year high. In addition, job openings across various industries in the US exceeded economists’ expectations in November. These signs of economic strength have led experts to predict several cuts in the Federal Reserve’s benchmark interest rate this year. Although the Fed does not directly affect mortgage rates, market expectations about the central bank’s policies often direct rate movements.
Sam Khater, Freddie Mac’s chief economist, pointed out that economic forces continue to put upward pressure on home prices, which in turn affects home purchases and higher home prices. As a result, mortgage applications fell 7% for the week, while refinance applications saw a modest increase of 2%. Looking ahead, the December jobs report may provide more insight into the future direction of interest rates, with weak payrolls potentially strengthening the case for further Fed rate cuts.
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