Average rate on 30-year mortgage hits 7%, its fifth straight increase

ABC News - Jan 16th, 2025
Open on ABC News

The average rate on a 30-year mortgage in the U.S. has increased to 7.04%, the highest in eight months, as reported by Freddie Mac. This marks a rise from last week's 6.93% and is part of a five-week upward trend. The increase in rates is attributed to rising bond yields, specifically the U.S. 10-year Treasury yield, which has climbed significantly in recent weeks. The higher mortgage rates are discouraging potential homebuyers, exacerbating a slump in home sales that has persisted since 2022. Despite a slight uptick in sales of previously owned homes in November, the housing market is poised to record its worst year for sales since 1995.

The uptick in mortgage rates follows the Federal Reserve's decision to slow down its rate cuts, aiming to control inflation that remains above its 2% target. This move reflects concerns about inflationary pressures that could be exacerbated by President-elect Donald Trump's proposed economic policies, such as increased tariffs on imports. These developments highlight the broader economic challenges facing the U.S., with implications for both the housing market and the wider economy as borrowing costs rise and consumer spending is potentially affected.

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RATING

6.8
Fair Story
Consider it well-founded

Overall, the news story is a well-structured and informative piece that effectively communicates the recent trends in mortgage rates and their economic implications. The article excels in accuracy, with reliable data sourced from Freddie Mac, providing readers with a factual and up-to-date overview of the mortgage market. However, the story could benefit from more balanced reporting, incorporating a wider range of perspectives to offer a comprehensive view of the situation.

Source quality is solid due to the reliance on authoritative figures, yet the inclusion of additional expert opinions would enhance the depth and credibility of the report. Transparency is adequate but could be improved by addressing the lack of context in certain areas and disclosing potential conflicts of interest or data limitations.

In terms of clarity, the article is mostly clear and easy to follow, though it would benefit from eliminating outdated references and providing more detailed explanations of complex financial concepts. By addressing these areas, the news story could elevate its overall quality, offering readers a more nuanced and engaging analysis of the mortgage market.

RATING DETAILS

8
Accuracy

The news story predominantly presents accurate and factual information, particularly with regard to the current mortgage rates and trends. The specific figures mentioned, such as the 30-year mortgage rate rising to 7.04% from 6.93%, and the 15-year rate increasing to 6.27% from 6.14%, are attributed to Freddie Mac, a reliable source in the mortgage industry. The story accurately reflects the sequential rise in mortgage rates over the past five weeks, aligning with broader economic reports and trends. Additionally, the connection between mortgage rates and the yield on the U.S. 10-year Treasury is correctly explained, giving readers a clear understanding of the underlying financial mechanisms affecting these rates.

However, there are a few areas where the accuracy could be questioned. The mention of President-elect Donald Trump seems out of context as it does not align with the current timeline, suggesting a possible oversight or error in the reporting. Furthermore, the story references upcoming home sales data as a future event, which could benefit from a specific date to enhance precision. Despite these minor discrepancies, the overall factual content remains robust and verifiable, meriting a high accuracy score.

6
Balance

The news story provides insights into the rise of mortgage rates and acknowledges the impact on potential homebuyers, which suggests an attempt at balance. However, the story predominantly focuses on the perspective of borrowers being negatively affected by the rising rates, potentially lacking a broader view of the situation.

The narrative could be seen as somewhat one-sided as it does not delve deeply into other perspectives, such as those of investors or financial institutions that might benefit from higher interest rates. Moreover, while the story mentions the Federal Reserve's stance on interest rates, it does not explore the rationale behind these decisions or the potential long-term economic benefits, which could provide a more rounded view.

In terms of bias, there is an implicit leaning towards highlighting the challenges faced by homebuyers without adequately addressing any positive economic indicators or counterarguments. Overall, while the story is informative, its balance could be improved by incorporating a wider range of perspectives and insights.

7
Clarity

The article generally succeeds in presenting information in a clear and concise manner, making the complex subject of mortgage rates accessible to a broad audience. The logical structure of the report, with a focus on current rates, historical comparisons, and economic factors, aids in enhancing reader understanding.

However, there are areas where clarity could be improved. The inclusion of outdated information regarding President-elect Donald Trump seems misplaced and may confuse readers about the timeline and relevance. Furthermore, the article could benefit from clearer explanations of financial terms and concepts, such as the bond yield's influence on mortgage rates, to cater to readers with less financial knowledge.

The tone remains largely neutral and professional throughout, with minimal use of emotive language, which is appropriate for a financial news story. With a few adjustments to eliminate outdated references and enhance explanations of technical details, the clarity of the article could be further improved.

7
Source quality

The primary source cited in the news story is Freddie Mac, a highly reputable institution within the mortgage industry, lending significant credibility to the financial figures and trends reported. This reliance on Freddie Mac ensures that the data presented is both authoritative and reliable, providing a strong foundation for the article.

However, the story could benefit from a greater diversity of sources to enhance its overall credibility and depth. For instance, including insights or data from additional financial analysts, economists, or industry experts could provide a more comprehensive view of the mortgage market and its implications. The story also references the Federal Reserve's actions but lacks direct quotes or references from Federal Reserve officials, which could bolster the report's authority.

Additionally, while the mention of the U.S. 10-year Treasury yield is relevant, the article does not cite specific sources or analysts commenting on this aspect, which could add further depth. Overall, the source quality is solid but could be improved with a broader range of expert input.

6
Transparency

The story offers a reasonable level of transparency by clearly presenting the data and trends related to mortgage rates and the broader economic context. It explains the link between mortgage rates and bond yields, providing readers with a fundamental understanding of the factors influencing these trends.

However, the article lacks transparency in some areas, such as the omission of specific dates for the release of upcoming home sales data, which would provide readers with a clearer timeline. Additionally, there is no discussion of potential conflicts of interest or the limitations of the data presented, which are crucial aspects of transparent reporting.

Moreover, the brief mention of President-elect Donald Trump's economic policies appears without context or explanation, potentially confusing readers and detracting from the story's overall transparency. By addressing these gaps and providing more detailed context, the article could achieve a higher level of transparency, ensuring that readers are fully informed.