Here's why mortgage rates are rising after the Fed's rate cut

**Mortgage Rates See Fourth Weekly Increase; Housing Market Struggles Persist**

Mortgage rates in the US have risen for the fourth consecutive week. This increase in borrowing costs reverses the summer relief Americans enjoyed when anticipating a rate cut from the Federal Reserve. The average rate for a 30-year fixed mortgage reached 6.54%, marking its highest since early August, yet it's still below this year's peak of 7.22% recorded in May.

An anticipated Fed rate cut led to a dip in mortgage rates, which hit a two-year low of 6.08% in late September. However, this decrease failed to stimulate homebuying. Sales of previously owned homes, the market majority, dropped by 1% to 3.84 million on an annualized basis, the lowest since October 2010. Mortgage applications followed suit, declining to levels not seen since July.

The sluggish housing demand could be linked to the timing of the rate drop, as many prefer to buy during warmer months. Prospective buyers could also be holding out for further rate reductions, with the Fed signaling potential continued rate cuts through 2025. Each mortgage rate percentage point significantly impacts monthly payments, but prevailing market conditions, such as a shortage of available homes and rising home prices, are straining affordability.

Recent strong employment and consumer spending data have shifted economic expectations, pushing bond yields higher, and, consequently, influencing mortgage rates. The 10-year Treasury yield rose to 4.24%, its highest since late July. Some potential mortgage rate declines are hindered by the government’s current fiscal challenges. Rising deficit concerns could impact mortgage availability as government borrowing affects the housing market's lending capacity.

For many, such as a young family in North Carolina awaiting more favorable rates, delayed affordability impacts their homeownership aspirations. Similarly, individuals contending with financial strains are placing significant life decisions on hold, hoping for improved market conditions that might include either reduced mortgage rates or lower home prices.