US Mortgage Rates Near 7%... Highest Level Since July

U.S. mortgage rates have risen to their highest level in five months.

On the 26th (local time), Freddie Mac, a U.S. government-sponsored mortgage company, announced that the average interest rate on 30-year fixed-rate mortgages increased from 6.72% a week ago to 6.85%. This is close to the psychological resistance level of 7% for homebuyers and is the highest level since mid-July. One year ago, it was 6.61%.

Despite the high mortgage rates, home purchases have increased. According to real estate brokerage Redfin, the number of U.S. home purchase contracts over the four weeks ending on the 15th rose 4.1% compared to the same period last year.

Mortgage rates generally follow the 10-year U.S. Treasury yield. However, due to concerns over fiscal deficits following the implementation of economic policies by President-elect Donald Trump, mortgage rates are actually on the rise. The U.S. central bank, the Federal Reserve (Fed), lowered the benchmark interest rate by 0.25 percentage points to 4.25?4.5% on the 18th, marking the third consecutive rate cut this year.

Homebuyers are expecting mortgage rates to decline next year. MarketWatch explained, "As a result, the housing market could become active again (next year)."

However, analysts including Moody's Analytics predict that the 30-year mortgage rate will remain around 7% next year.

Meanwhile, the average interest rate on 15-year fixed-rate mortgages rose from 5.92% last week to 6%. One year ago, it was 5.93%.