Mortgage rates increased for the fifth week in a row as the market contends with growing jitters about the upcoming election and strong data about the economy.
In the week ended Oct. 31, the 30-year, fixed-rate mortgage rose to an average of 6.72%, according to mortgage giant Freddie Mac. That’s up from the previous week’s average of 6.54% but still lower than the same time a year earlier when rates averaged 7.76%. The shift brings rates to the highest average since August.
The 15-year, fixed-rate mortgage also climbed, averaging 5.99%. Last week, it stood at 5.71%, and a year earlier it was 7.03%.
Daily mortgage rates are usually more volatile than the weekly average, and as of Thursday afternoon they had also shifted. Though the 30-year, fixed-rate mortgage had slightly decreased from Wednesday, it was still higher than 7%, according to Mortgage News Daily. At the same time, the 15-year, fixed-rate mortgage had increased from the previous day to 6.5%.
At those rates, if a buyer took out a 30-year, fixed-rate mortgage for a $250,000 loan, they’d be paying about $1,667 per month. And according to Mortgage News Daily, rates were unlikely to change much through Thursday.
The recent upswing in mortgage rates has been fueled by a mix of factors stirring uncertainty and doubt in the market. For one, next week’s election is breeding worry in the market, and industry professionals expect that until the results are known, things will be choppy.
At the same time, stronger-than-expected economic data has left industry professionals concerned about the Federal Reserve’s next decision about interest rates. That decision is expected next week after the central bank’s next meeting.
Though interest rates won’t directly affect the mortgage market, investors’ perceptions of the Fed’s moves can lead to swings in mortgages.
“The trend has not been our friend,” Melissa Cohn, regional vice president of William Raveis Mortgage told personal finance website Bankrate in a survey. “Mortgage rates continue to march upward as economic data and the uncertainty about the election are front and center.”
And on Friday, the latest government data about the job situation in the United States is set to be released with the potential to create even more unrest before the Fed meets. If that report shows that the jobs market is stronger than expected, it could lead to even more upward pressure on mortgage rates. It could also "make the Fed think twice about another rate cut," according to Cohn.
Those “potential inflection points” will likely keep mortgage rates “volatile,” according to Freddie Mac’s Chief Economist Sam Khater.
“Although uncertainty will remain, it does appear mortgage rates are cresting, and are not expected to reach the highs seen earlier this year,” he said in a statement.