Home mortgage rates remain stubbornly high, even after the Federal Reserve cut its federal funds rate twice in recent months. The average on a 30-year fixed mortgage rose to 6.24% last week, the second straight weekly increase. Still, the rate is near its lowest point this year, and down significantly from a year ago, when it was at 6.78%.
It's not a huge surprise that mortgage rates are ticking up despite the Fed's recent rate cuts. "First of all, we had a government shutdown," says Cliff Freeman, Texas realtor with the Cliff Freeman Group. "That took all the numbers that the Fed relies on and just clouded it all up, because those numbers may not get calculated, they may not be as accurate...so there is a lot of uncertainty."
The other factor driving mortgages is the Treasury yield, which is more closely tied to mortgage rates than the Fed rate. "The 10-year Treasury is what 30-year fixed rate mortgages use for their basis of pricing," says Freeman. "So as the market reads into the future, there is uncertainty going forward on what things are going to look like in the longer term."
"Therefore, mortgage rates compensated for that uncertainty by bouncing up a little bit," he continues.
For home buyers, it likely means rates north of 6% are here to stay for awhile (the average has been above 6% since September 2022). But Freeman says there is a direct solution to getting home prices down and stirring the sleeping housing market. "It's build, baby, build," he tells KTRH. "Building is the only way we're going to get ourselves out of this nearly 4-million nationwide shortage of homes to get to a balanced market again."
Photo: Moment RF