WASHINGTON (Reuters) - U.S. mortgage rates increased this week following three straight weekly declines and could rise further after the Federal Reserve projected fewer interest rate cuts in 2025, boosting the yield on the 10-year Treasury note.
The average rate on the popular 30-year fixed-rate mortgage rose to 6.72% after falling to 6.60% last week, which was the lowest level since the week ending Oct. 24, mortgage finance agency Freddie Mac (OTC:FMCC) said on Thursday. The rate averaged 6.67% during the same period a year ago.
"This week, mortgage rates crept up to a similar average as this time in 2023," said Sam Khater, Freddie Mac chief economist. "For the most part, mortgage rates have moved between 6 and 7 percent over the last 12 months."
The U.S. central bank on Wednesday cut its benchmark overnight interest rate by 25 basis points to the 4.25%-4.50% range, but projected only two rate reductions in 2025, citing the economy's continued resilience and still-elevated inflation.
In September, the Fed had penciled in four quarter-point rate cuts in 2025. The shallower rate cut path next year in the latest projections also reflected uncertainty over policies from President-elect Donald Trump's incoming administration, including tariffs on imported goods, tax cuts and mass deportations of undocumented immigrants, which economists have warned would be inflationary.
The yield on the U.S. 10-year Treasury note touched a fresh 6-1/2-month high on Thursday. Mortgage rates track the 10-year Treasury note.
Earlier on Thursday, the National Association of Realtors reported a surge in sales of existing homes in November. The sales, however, likely reflected contracts that were signed in September, when mortgage rates were falling before and shortly after the Fed embarked on its policy easing cycle.