Prime Highlights:
Average 30-year mortgage rate increases to 6.93%, marking the fourth consecutive weekly rise.
Economic data indicating robust job openings and persistent inflation pressures contribute to rate hikes.
Key Background:
Mortgage rates have risen for the fourth consecutive week, with the average 30-year rate reaching 6.93% in the week ending January 9, 2025, according to Freddie Mac data. This marks a slight increase from the previous week’s 6.91%. Similarly, 15-year mortgage rates saw a minor rise, moving from 6.13% to 6.14%.
The uptick in mortgage rates follows new economic data revealing persistent inflation and an unexpected surge in job openings, which both complicate the Federal Reserve’s anticipated path toward rate cuts. The 10-year Treasury yields, which often correlate with mortgage rates, also increased following the release of this data, suggesting that the Fed may hold off on aggressive interest rate cuts.
December’s data from the Institute for Supply Management highlighted growth in the service sector, with costs rising to near a two-year high. In addition, job openings across various industries in the U.S. exceeded economists’ expectations in November. These signs of economic strength have led experts to predict fewer cuts in the Federal Reserve’s benchmark interest rate this year. While the Fed doesn’t directly influence mortgage rates, market expectations about the central bank’s policies typically guide rate movements.
Sam Khater, Freddie Mac’s chief economist, pointed out that the strength of the economy continues to put upward pressure on mortgage rates, further impacting housing affordability alongside high home prices. Consequently, mortgage applications for new home purchases fell by 7% week-over-week, while refinancing applications saw a modest increase of 2%. Looking ahead, the December jobs report could provide additional insight into the future direction of interest rates, with a weaker payrolls figure potentially strengthening the case for more Fed rate cuts.
