US mortgage rates surge as Fed's rate cut impact fades

In the United States, mortgage rates rose for the fourth consecutive week, reaching an average of 6.54% for a standard 30-year fixed mortgage as of October 24, 2024. This increase in borrowing costs follows a period of declining rates earlier this summer, which had provided some relief to potential home buyers amidst improving inflation reports. Despite hopes that recent Federal Reserve rate cuts would stimulate the housing market, robust economic indicators have shifted market expectations, causing bond yields to rise. Sales of previously owned homes fell by 1% in September, marking a seasonally adjusted annual rate of 3.84 million—an alarming low not seen since October 2010. The housing market remains largely affected by rising economic strength and government financial concerns, including an anticipated increase in national debt driven by political developments. Investor Paul Tudor Jones has expressed fears about the implications of high budget deficits on housing financing, emphasizing that government borrowing may restrict available mortgage capital. The report highlights the struggles of young renters like Kimberly and Zach in North Carolina, and Ken in South Carolina, who are feeling the pressure of costs and are postponing homeownership goals due to elevated mortgage rates and rents. Consequently, many potential buyers are awaiting more favorable market conditions, whether through lower rates or decreased home prices, to make homeownership more attainable and secure for their financial futures.