Mortgage rates rose this week to the highest level since May 2024 during a volatile period for the bonds that closely track them.
The average 30-year mortgage rate jumped to 7.04% through Wednesday, up from 6.93% a week earlier, after strong employment data pushed yields higher on the Treasury bonds that are most closely linked to mortgage rates. Average 15-year mortgage rates also rose to 6.27%, from 6.14%, according to Freddie Mac.
The latest jump in rates came after December’s jobs report showed that the US added 256,000 jobs that month, far more than expected. The strong hiring data caused traders to reevaluate their expectations for Federal Reserve rate cuts this year and sparked a steep rise in bond yields.
“The underlying strength of the economy is contributing to this increase in rates,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
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It’s the fifth straight week that mortgage rates have moved higher. But in the coming days, prospective homebuyers might get some relief: Treasury yields have dropped sharply after a key inflation metric eased for the first time since July. As of midday Thursday, the 10-year Treasury yielded 4.61%, down from as high as 4.79% on Tuesday.
Mortgage rates move primarily based on expectations about the path of benchmark interest rates set by the Fed. Traders now see even odds that the Fed will cut interest rates by May, up from a roughly 30% chance earlier this week, according to CME FedWatch data.
“There are more wild cards than normal this year,” said Danielle Hale, chief economist at Realtor.com, adding that the new Congress and unknowns around President-elect Donald Trump’s return to office are likely weighing on rates. “I’m confident that some of the uncertainty will settle down, and that will help mortgage rates settle a little bit.”
Read more: Is this a good time to buy a house?
Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.
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