Mortgage rates rose for the third week in a row as the U.S. economy continued to show signs of strength .
The 30-year mortgage rate jumped to the highest level since mid-August, averaging 6.44% as of Oct. 17, according to data released by Freddie Mac on Thursday.
It’s up 12 basis points from the previous week. One basis point is equal to one hundredth of a percentage point.
Rates are still substantially lower than they were last year. A year ago, the 30-year mortgage rate was averaging 7.63%.
The average rate on the 15-year mortgage was 5.63% as of Oct. 17, up from 5.41% last week. The 15-year rate was at 6.92% a year ago.
Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage.
Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging 6.63% as of Thursday morning. The Mortgage Bankers Association’s survey said that the 30-year was at 6.52% as of Oct. 11.
The big picture: Home buyers are in for a rough period as borrowing costs for mortgages rise across the board.
Rates are rising again as the financial markets digest incoming information about the strength of the U.S. economy.
The stronger the economy, the less likely the Federal Reserve will be to cut interest rates, which in turn will pressure Treasury yields upwards . Mortgage rates, which move in tandem with the 10-year Treasury note BX:TMUBMUSD10Y, will also then move up.
What Freddie Mac said: “In general, higher rates reflect the strength in the economy that is supportive of the housing market,” Sam Khater, chief economist at Freddie Mac, said in a statement.
But there’s a silver lining: “Notably, as compared to a year ago, rates are more than one percentage point lower,” Khater said. “And potential homebuyers can stand to benefit, especially by shopping around for the best quote, as rates can vary widely between mortgage lenders.”
What are they saying? The increase in rates will be a “disappointment to home buyers and sellers who had hoped for rates to decline after the Federal Reserve cut the short-term federal funds rate in September,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement.
“Mortgage rates should come down over the next couple of months; however, timing does matter,” she added. “If rates stay elevated into November — and if there is any chaos following the Presidential election — we could see buyers and sellers push off their decisions to get into the market until 2025.”
Even as some buyers hold off due to uncertainty around rates and the election, home prices continue to hold steady, Senada Adzem, a Boca Raton, Fla.-based real-estate agent with Douglas Elliman, told MarketWatch. Cash buyers, on the other hand, are moving quickly, she added.