Mortgage rates remain elevated as Trump’s agenda fuels investor worries

Posted on January 23, 2025   |  

Mortgage rates for a 30-year fixed loan increased to over 7% during the week ending January 16, up from 6% in late September.

Homebuyers with a $300,000 mortgage at 7% pay $1,996 a month, $400 more than the $1,610 they would pay at 5%.

The Fed cut its interest rate three times since September, reducing it by one percentage point as inflation slowed, but mortgage rates remain high.

Experts believe mortgage rates likely won’t drop to 6% before 2026 because they depend more on 10-year U.S. Treasury yields than the Fed’s rate.

Treasury yields increased to 4.6% on Tuesday, rising from 3.6% in September as investors traded bonds.

Policies like tariffs and mass deportations could raise inflation, making the Fed reduce rates more slowly or possibly increase them again.

Lenders are currently adding a 2.4-point premium to mortgage rates over Treasury yields, which is higher than the usual 1.7-point average.

The average price for a home in November was $406,100, a 5% rise from $387,800 in November last year.