The average rate for a 30-year fixed mortgage inched higher to 6.49% this week, according to Freddie Mac’s latest Primary Mortgage Market Survey. Although the increase was modest from the prior week’s 6.47%, rates have generally held steady over the past six weeks, reflecting a cautious market amid ongoing economic uncertainties.
Shorter-term loan costs also saw a slight rise, with the 15-year fixed mortgage rate climbing to 5.84% from 5.81%. Both current figures remain below their respective averages from a year ago, when the 30-year and 15-year rates averaged 6.77% and 5.89%, respectively. The Federal Reserve’s decision last week to keep interest rates steady between 3.5% and 3.75%, in light of persistent inflation and geopolitical instability, contributed to this cautious environment for mortgage borrowing costs.
Mortgage rates continue to track movements in the 10-year Treasury yield, which hovered near 4.4% recently, rather than following the Fed’s benchmark rate directly. The inflation backdrop remains significant: the Commerce Department reported a 4.1% rise in the personal consumption expenditures (PCE) price index over the last year, while the core PCE, excluding volatile food and energy prices, increased by 3.4%. Both figures remain well above the Federal Reserve’s 2% inflation target, influencing expectations that interest rate increases, rather than cuts, could still materialize before year-end.
The Fed’s updated outlook suggests that despite the decision to pause rate hikes, a significant portion of policymakers anticipate an additional increase before the year concludes. However, market tools such as the CME FedWatch currently predict that rates will remain stable for the remainder of the year, reflecting uncertainty surrounding inflation dynamics and global tensions, especially related to oil supply disruptions linked to conflicts in Iran.