When Treasury yields go up, so do mortgage rates when they go down, mortgage rates tend to follow.įederal Reserve Board Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting, at the Federal Reserve in Washington, DC, on July 26, 2023. Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. While the Fed does not set the interest rates that borrowers pay on mortgages directly, its actions influence them. The Fed raised its benchmark lending rate by a quarter point Wednesday, lifting interest rates to their highest level in 22 years in an ongoing battle to cool the economy and bring down inflation. “Rising consumer confidence often leads to greater spending, which could drive more consumers into the housing market.” “However, overall US consumer confidence is unwavering, surging to a two-year high in the Conference Board’s Consumer Confidence Index for July,” Khater said. Existing home sales and sales of newly constructed homes were down in June as higher rates have been keeping inventory low, prices higher and hurting affordability. Higher interest rates continue to dampen activity in the interest-rate sensitive sector of housing, he said. “Mortgage rates inched up slightly after a significant decline last week,” said Sam Khater, Freddie Mac’s chief economist. The survey includes only borrowers who put 20% down and have excellent credit. The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. A year ago, the 30-year fixed-rate was 5.30%. The 30-year fixed-rate mortgage averaged 6.81% in the week ending July 27, up from 6.78% the week before, according to data from Freddie Mac released Thursday. US mortgage rates moved higher this week following the Federal Reserve’s rate hike, after dropping last week.
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