**U.S. Mortgage Rates Climb for Third Consecutive Week, Reaching Eight-Week High**

Mortgage rates in the United States have continued their upward climb for the third straight week, reaching the highest level seen in eight weeks. According to mortgage buyer Freddie Mac, the average rate on a 30-year fixed mortgage hit 6.44% this week, up from 6.32% last week. This marks a significant increase from a year ago, when the rate averaged 7.63%.

The last time the average 30-year mortgage rate was higher was on August 22, when it stood at 6.46%. Various factors influence mortgage rates, notably the bond market's reaction to the Federal Reserve's interest rate policy decisions. This can affect the direction of the 10-year Treasury yield, which lenders use as a benchmark for pricing home loans. As of Thursday, the 10-year Treasury yield was at 4.09%, up from 3.62% in mid-September, right before the Federal Reserve reduced its benchmark lending rate by half a point.

The average rate on a 30-year mortgage has been steadily rising after hitting a two-year low of 6.08% three weeks ago. Despite the recent uptick, it remains below this year's peak rate of 7.22% reached in May. Recent economic reports have been positive, contributing to the rise in mortgage rates. Notable reports include a stronger-than-expected September jobs report and an overview of consumer prices.

“While we expect the long-run trend in mortgage rates to be downward, recent weeks have brought volatility,” commented Ralph Mclaughlin, senior economist at Realtor.com. Generally, rising mortgage rates indicate economic strength, which can bolster the housing market. However, higher rates can also lead to increased monthly costs for borrowers, diminishing their purchasing power in a housing market where prices are nearing all-time highs.

Rising rates have also discouraged homeowners who previously locked in lower rates from listing their homes for sale, as they would face higher rates on new home loans. The housing market has experienced a sales slump since 2022, driven by elevated mortgage rates that have deterred many potential buyers. Sales of previously occupied homes in the U.S. declined in August even as mortgage rates were beginning to ease.

The recent increase in mortgage rates may already be dissuading potential buyers. The Mortgage Bankers Association reported a 17% drop in mortgage applications last week compared to the previous week. More specifically, applications for loans to refinance an existing mortgage fell 26%, though this figure is still more than double what it was a year ago when rates were higher.

Borrowing costs for 15-year fixed-rate mortgages, which are commonly used by homeowners looking to refinance to a lower rate, have also increased. This week, the average rate rose to 5.63% from 5.41% last week, whereas it averaged 6.92% a year ago, according to Freddie Mac.

Economists generally predict that mortgage rates will remain near their current levels for the rest of the year. Fannie Mae projects that the rate on a 30-year mortgage will average 6.2% in the fourth quarter of this year and decline to an average of 5.7% in the same quarter next year.