The average for a 30-year fixed-rate mortgage fell 0.01% this week to 6.78%, halting a six-week rise that began in late September, according to Freddie Mac.

Mortgage rates have been on a roller coaster ride in recent months. Following the Federal Reserve’s rate cut of 0.5% in mid-September, rates fell to 6.08% later that month, their lowest point in more than two years. However, positive economic news and political uncertainty began to push rates up, reaching 6.79% last week, where they have since plateaued.

“After a six-week climb, rates have leveled off, but overall affordability continues to be an issue for potential homebuyers,” said Sam Khater, Freddie Mac’s chief economist. “Our latest research shows that mortgage payments compared to rents on the same homes are elevated relative to most of the last three decades.” 

These rate changes come down to the 10-year Treasury bond, according to Odeta Kushi, deputy chief economist at First American Financial Corp. Mortgage rates are loosely benchmarked to the 10-year Treasury bond. Shifts in demand for Treasurys cause mortgage rates to change as well.

In First American’s Existing Home Sales Outlook Report for October, Kushi said that investor expectations surrounding the first Fed rate cut in September put downward pressure on mortgage rates, as investors predicted lower inflation and further rate cuts. However, bullish economic data, coupled with the elections, have raised worries about inflation and lowered expectations for future rate cuts. The changing attitudes pushed Treasury yields up and resulted in higher interest rates.

“Mortgage rates won’t decline significantly through the end of the year and into 2025 unless the Fed throws us a curveball, such as cutting rates even more than expected,” Kushi noted in the report. “But assuming the economy continues to show signs of normalization and inflation continues to moderate, rates will likely modestly ease through 2025, as the Fed continues with its rate-cutting cycle.”

Kushi expects lower rates to boost affordability and ease the lock-in effect for homeowners, who enjoy such low interest rates on their current mortgages they are reluctant or unable to sell their homes and buy other properties. Relaxing the lock-in effect should increase the inventory on the market and boost the pace of home sales. But Kushi cautions that sales activity will remain constrained until mortgage rates fall further than currently expected.

“If lower mortgage rates materialize, they could help thaw the housing market,” Kushi writes. “But the deep freeze for many rate-locked homeowners is likely to linger.”