Average rate on a 30-year mortgage in the US rises to the highest level in 8 weeks

The average rate on a 30-year mortgage in the U.S. rose for the third week in a row, reaching its highest level in eight weeks.

The rate rose to 6.44% from 6.32% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 7.63%.

The last time the average rate was higher was on August 22, when it was 6.46%.

Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve's interest rate policy decisions. That can move the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans. The yield on the 10-year Treasury was 4.09% Thursday, up from 3.62% in mid-September, just days before the Fed slashed its benchmark lending rate by a half a point.

The average rate on a 30-year mortgage has been rising since reaching its lowest level in two years — 6.08% — three weeks ago. The rate remains well below the 7.22% it hit in May, its 2024 peak.

Mortgage rates have been climbing in recent weeks following a spate of encouraging reports on the U.S. economy, including a hotter-than-expected September jobs report and a snapshot of consumer prices.

"While we expect the long-run trend in mortgage rates to be downward, recent weeks have brought volatility," said Ralph Mclaughlin, senior economist at Realtor.com.

Rising rates can also discourage homeowners who locked in a lower rate on their existing mortgage to list their home for sale if it means taking on a loan on a new home at a far higher rate.

The housing market has been in a sales slump since 2022 as elevated mortgage rates put off many would-be homebuyers. Sales of previously occupied U.S. homes fell in August even as mortgage rates began easing.

The recent uptick in mortgage rates may already be discouraging some would-be home shoppers. Mortgage applications fell 17% last week from the prior week, according to the Mortgage Bankers Association.

Applications for loans to refinance a mortgage fell 26%, though they were still more than double what they were a year ago, when rates were higher.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also increased this week. The average rate rose to 5.63% from 5.41% last week. A year ago, it averaged 6.92%, Freddie Mac said.