Mortgage rates are at 7%, hitting a seven-month high. But relief may be on the horizon

Mortgage rates rose this week to the highest level since May 2024 during a volatile period for bonds that closely track them.

The average 30-year mortgage interest rate jumped to 7.04% as of Wednesday, up from 6.93% the week before, after strong employment data pushed up Treasury yields more closely tied to mortgage rates. Average interest rates on a 15-year mortgage also rose to 6.27%, from 6.14%, according to Freddie Mac.

The latest jump in interest rates came after the December jobs report showed that the United States added 256,000 jobs that month, much more than expected. the Strong employment data It prompted traders to reevaluate their expectations for interest rate cuts by the Federal Reserve this year and sparked a sharp rise in bond yields.

“The fundamental strength of the economy is contributing to this increase in interest rates,” Sam Khater, chief economist at Freddie Mac, said in a statement.

It’s the fifth week in a row that mortgage rates have risen. But in the coming days, potential homebuyers may get some relief: Treasury yields have fallen sharply after a year The main measure of inflation eased For the first time since July. As of midday Thursday, 10-year Treasury bonds were yielding 4.61%, down from 4.79% on Tuesday.

Mortgage rates move primarily based on expectations about the path of benchmark interest rates set by the Federal Reserve. Traders now see 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 usual this year,” said Danielle Hale, chief economist at Realtor.com, adding that a new Congress and unknowns around President-elect Donald Trump’s return to office are likely to impact interest rates. “I’m confident that some of the uncertainty will subside, and that will help stabilize mortgage rates a little bit.”