Average mortgage rates have increased for a sixth straight week. Freddie Mac reports its Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage (FRM) averages 6.79% this week, even though some rate monitors have put the rate above 7% again.
“Mortgage rates continued to inch up this week, reaching 6.79 percent,” said Sam Khater, Freddie Mac’s chief economist. “It is clear purchase demand is very sensitive to mortgage rates in the current market environment. As soon as rates began to rise in early October, purchase applications fell and over the last month and have declined by10%.”
Mortgage rates have been steadily rising over the last six weeks but moved sharply higher this week after Donald Trump’s election victory. The yield on the Treasiury’s 10-year bond was the catalyst.
Bond yields are rising on the expectation that Trump’s proposed tax cuts and fiscal spending will keep inflation higher for a while. Since mortgage rates are often linked to the yield on the 10-year bond, mortgage rates increased, along with the yield.
“Ten-year Treasury rates remain volatile and continue to put upward pressure on mortgage rates,” said Joel Kan, MBA’s deputy chief economist.
With the rise in rates, mortgage applications have declined, falling last week to their lowest level since mid-August. Refinance activity was even lower.
“The average loan size on a refinance application dropped below $300,000, as borrowers with larger loans tend to be more sensitive to any given changes in mortgage rates,” Kan said.