Mortgage Rates Rise Despite Fed Rate Cuts

Mortgage rates have continued to rise, reaching an average of 6.79% for a 30-year fixed-rate mortgage, marking the sixth consecutive weekly increase despite the Federal Reserve's recent 25-basis point interest rate cut. This rise in rates, which have increased from 6.72% the previous week, is attributed to surging yields on 10-year U.S. Treasury bonds rather than the Fed's actions. As a result, homebuyer demand has significantly weakened, with purchase applications dropping 10% over the past month. Refinance activity has also declined, falling by 19% in the latest survey due to elevated borrowing costs. Analysts express concern that this trend may persist into 2025, impacting affordability and market activity. Overall, the disconnect between the Fed's rate cuts and rising mortgage rates is puzzling consumers and hindering the housing market.