The 30-year mortgage rate in the US rose again this week, reaching the highest level in nearly three months.

Mortgage buyer Freddie Mac said Thursday that the interest rate rose to 6.54% from last week’s 6.44%. Despite the recent rise, the average rate is down from a year ago, when it climbed to 7.79%, a 23-year high.

When mortgage rates increase, it can add hundreds of dollars a month in costs to borrowers. The average rate has increased for four consecutive weeks. It hasn’t been this high since August 1, when it was 6.73%.

Borrowing costs for 15-year fixed-rate mortgages, which are popular with homeowners looking to refinance their mortgage at a lower rate, also rose this week. The average rate increased to 5.71% from last week’s 5.63%. A year ago, the average rate was 7.03%, Freddie Mac said.

Mortgage rates are affected by several factors, including how the bond market responds to the Federal Reserve’s interest rate policy decisions and data on inflation and the economy. That could change the path of the 10-year Treasury yield, which lenders use as a guide when pricing mortgages.

Average interest on a 30-year mortgage four weeks ago It fell to 6.08%, the lowest level in two years – after Fed cuts key interest rate It was the first in more than four years and signaled additional cuts through 2026. While the central bank does not set mortgage rates, its policy pivot has created a path for mortgage rates to go lower overall.

However, Treasury yields have risen in recent weeks following bullish reports. US economy ruins stronger than expected. The yield on the 10-year Treasury note was at 4.20% Thursday afternoon. It was at 3.62% in mid-September, just days before the Fed cut interest rates.

“Continued strength in the economy has caused mortgage rates to rise once again this week,” said Sam Khater, chief economist at Freddie Mac. “Over the last few years, there has been a tension between pessimistic economic narrative and economic data that is stronger than that narrative. This situation led to higher-than-normal fluctuations in mortgage loan interest rates, despite the strengthening of the economy.”

The recent rise in mortgage interest rates is a negative for potential home buyers as it reduces their purchasing power at a time when home prices are near record levels despite a decline in the housing market that extends into 2022.

Sales of previously occupied homes in the US slowed in September Even though mortgage interest rates fell, they fell to their weakest annual pace in nearly 14 years. Meanwhile, new home sales rose 6.3% nationwide in September from a year earlier, the U.S. Census Bureau reported Thursday. Home builders lowered prices and offered incentives, such as paying to lower mortgage rates, to lessen the impact of rising mortgage rates.

Economists generally expect mortgage interest rates to remain near current levels at least this year. Fannie Mae estimates that the 30-year mortgage rate will average 6.2% in the October-December quarter and drop to an average of 5.7% in the same quarter next year.

“The big picture looks like mortgage interest rates will fall in the coming months, but in the short term, rates are very likely to move up and down,” said Lisa Sturtevant, chief economist at Bright MLS.