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Mortgage rates push farther past 7%

Written by Edited by
Published on January 08, 2025 | 3 min read

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A house on a stack of money
Image by PM Images/Getty Images; Illustration by Hunter Newton/Bankrate

Mortgage rates climbed this week, with the 30-year fixed rate averaging 7.08 percent, according to Bankrate’s latest lender survey. Since the Federal Reserve began cutting interest rates in September, mortgage rates have risen sharply.

Current mortgage rates

Loan type Current 4 weeks ago One year ago 52-week average 52-week low
30-year 7.08% 6.78% 6.94% 6.91% 6.20%
15-year 6.30% 5.99% 6.19% 6.20% 5.40%
30-year jumbo 7.07% 6.82% 6.94% 6.94% 6.36%

The 30-year fixed mortgages in this week’s survey had an average total of 0.29 discount and origination points. Discount points are a way for you to reduce your mortgage rate, while origination points are fees lenders charge to create, review and process your loan.

Monthly mortgage payment at today’s rates

The national median family income for 2024 was $97,800, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in November 2024 was $406,100, according to the National Association of Realtors. Based on a 20 percent down payment and a 7.08 percent mortgage rate, the monthly payment of $2,179 amounts to 27 percent of the typical family’s monthly income.

Will mortgage rates fall in 2025?

Since September, the Federal Reserve has cut its benchmark interest rate a full percentage point — and yet mortgage rates are up nearly a full percentage point. Those divergent paths underscore this reality: Fixed mortgage rates are not set directly by the Fed, but by investor appetite, particularly for 10-year Treasury bonds. The 30-year fixed-rate mortgage rate moves with the yield on 10-year Treasury bonds.

“The 30-year mortgage rates are tied to the 10-year Treasury bonds, and long-term Treasury bonds have been increasing. Therefore, residential loan rates haven’t been falling as much as people have expected,” says Calixto Garcia-Velez, president and CEO at BanescoUSA in Miami.

When there’s uncertainty in the market, investors buy Treasury bonds, which in turn drives yields — and, often, mortgage rates — downward. However, Treasury yields have been rising as inflation remains stubbornly persistent.

Meanwhile, housing economists and mortgage players have seized on a new narrative — that four more years of President-elect Donald Trump will mean ever-growing deficits, and that those deficits will put upward pressure on 10-year Treasury yields and, in turn, mortgage rates.

Then there’s the Fed. Lenders and mortgage investors had been anticipating the central bank’s rate cuts in September, November and December, and economic indicators such as hiring have shown signs of strength.

In its 2025 forecast, Bright MLS expects rates to stay above 6 percent throughout the year before settling at 6.25 percent in the fourth quarter. Real estate brokerage Redfin’s 2025 forecast has an even less hopeful outlook, expecting mortgage rates to be in the 6.8 percent range a year from now.

“Tariffs could be inflationary, and enacting more tax cuts would increase the U.S. deficit, both of which would push mortgage rates up,” Redfin predicted.