Mortgage Rates Sticking High Despite Fed Rate Hike Expectations

A Reuters poll of property experts suggests that US mortgage rates will remain higher than previously forecasted and decline only modestly over the coming quarters. This is due to long-term yields being driven more by federal borrowing needs, inflation expectations, and term premium than Fed policy rates.

The average 30-year mortgage rate has risen nearly 70 basis points to about 6.85% since February, tracking the rise in the benchmark US 10-year Treasury yield, which crossed the politically sensitive 5% level on Monday.

Housing analysts predicted mortgage rates to average 6.60% and 6.52% over the next two quarters, up from 6.30% and 6.24% forecast in June. Annual averages were put at around 6.40% for this year and next.