Mortgage Rates Go Up for the Sixth Week During Election Time

For the past six weeks, the cost of borrowing money to buy a house has been going up. This increase is happening as the interest rates on government loans, known as Treasury yields, also rise during the presidential election period.

The average cost of a 30-year fixed-rate home loan has gone up to 6.79% from last week's 6.72%, according to information from Freddie Mac. The average for a 15-year fixed-rate loan stayed almost the same, moving slightly from 5.99% to 6%.

The cost to borrow for a home usually follows a pattern similar to the Treasury yields, which have been increasing lately because traders believed that former President Donald Trump would win the election and introduce policies leading to higher inflation, such as tariffs.

After Trump's victory, bond yields, which move opposite to bond prices and have an impact on mortgage rates, jumped even more before slightly dropping. They ended up around 4.36%.

Even though the Federal Reserve (the central bank of the United States) might lower interest rates, this isn't expected to immediately affect mortgage rates.

Experts in the housing market think that the cost of borrowing for a home will remain high for some time. Lisa Sturtevant, a chief economist, says that even though she believes rates will go down from where they are now, they will likely fluctuate and could stay above 6% for the whole next year.

Read more: What to Know About the 2024 and 2025 Housing Market for Buyers and Sellers

Because of the rising rates, fewer people have been looking to buy homes or refinance their mortgages. There's been a 5% drop in home purchase applications and a 19% drop in refinancing applications in one week, as reported by the Mortgage Bankers Association.

Sam Khater, an economist at Freddie Mac, mentioned that the demand to buy houses is currently very sensitive to changes in mortgage rates. As rates started to rise in early October, there was a noticeable 10% reduction in home applications.

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