US mortgage rates edge up again: 30-year rate climbs to 6.24% in a week from 6.22%; housing affordability remains a key concern

The 30-year US mortgage rate rose slightly for the second consecutive week but stayed close to its lowest level of the year.Freddie Mac, quoted by AP, reported on Thursday that the long-term mortgage rate increased to 6.24 per cent from 6.22 per cent the previous week. A year earlier, the rate stood at 6.78 per cent. The rate reached 6.17 per cent a fortnight ago, marking its lowest point in over a year.The 15-year fixed-rate mortgage, often preferred by homeowners for refinancing, edged down to 5.49 per cent from 5.5 per cent last week, compared to 5.99 per cent during the same period last year.Mortgage rates are influenced by several factors, including Federal Reserve policy, and bond market expectations on inflation and the economy. These rates generally track the 10-year Treasury yield, a key benchmark for home loan pricing, which stood at 4.10 per cent by Thursday midday — a slight increase from the previous week.Higher mortgage rates continue to weigh on homebuyers’ purchasing power. Rates have remained above 6 per cent since September 2022, when they began climbing from historic lows, triggering a prolonged housing market slowdown.Sales of existing US homes hit their lowest level in nearly 30 years in 2022. Although activity remained muted this year, sales rose in September to their highest since February as borrowing costs eased.“Lower rates could finally be prompting some buyers to get into the market, which could lead to a surprisingly busy November and December, a time of the year when home sales activity usually slows,” said Lisa Sturtevant, chief economist at Bright MLS.Home purchase loan applications rose nearly 6 per cent last week to their highest level since September, despite the modest rate increase, according to the Mortgage Bankers Association.The recent drop in mortgage rates has also benefited homeowners refinancing existing loans. Refinancing applications accounted for about 56 per cent of total mortgage activity last week, a slight dip from the previous week.Rates began easing in July, ahead of the Federal Reserve’s September decision to cut its main interest rate for the first time in a year, amid growing concerns over labour market conditions. Despite another rate cut last month, Fed Chair Jerome Powell cautioned that future reductions were “not guaranteed.”According to CME Group data, traders have trimmed expectations of another Fed rate cut in December to 53 per cent, down from nearly 70 per cent a week earlier.While the Fed does not directly set mortgage rates, its short-term rate moves influence borrowing costs indirectly. When the central bank made its first rate cut in over four years last autumn, mortgage rates unexpectedly climbed above 7 per cent in January 2023, as the 10-year Treasury yield approached 5 per cent.Despite rates falling from their 2025 highs, housing affordability remains a major hurdle following sharp property price increases. The Trump administration’s recent proposal to introduce 50-year mortgages to address the affordability crisis has drawn criticism from several economists and policymakers.