The average rate for a 30-year U.S. mortgage edged higher for the third week in a row, though it remains close to its low point in 2025.

The average long-term mortgage rate ticked up to 6.26 percent last week from 6.24 percent the week before, mortgage buyer Freddie Mac stated. A year ago, the rate averaged 6.84 percent.

Four weeks ago, the average rate was at 6.17 percent — the lowest level in more than a year.

Borrowing costs for 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also inched up last week. The rate averaged 5.54 percent, up from 5.49 percent the week before. A year ago, it was 6.02 percent, according to Freddie Mac.

When mortgage rates rise, they reduce homebuyers‘ purchasing power. The average rate for a 30-year mortgage has been stuck above 6 percent since September 2022, the year mortgage rates began climbing from historic lows.

That’s helped kept sales of previously occupied U.S. homes stuck at around a 4 million annual pace going back to 2023. Historically, sales have typically hovered around 5.2 million a year.

While sales have been sluggish this year, they received a boost this fall as mortgage rates eased. The average rate for a 30-year home loan has stayed below 6.4 percent since early September. Last month, home sales accelerated to their fastest pace since February.

Mortgage rates are influenced by several factors, from the Federal Reserve‘s interest rate policy decisions to bond market investors’ expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide for pricing home loans.

The 10-year yield was at 4.10 percent at midday on Nov. 20. That’s down slightly from two weeks ago, but up from around 3.95 percent on Oct. 22.

Mortgage rates began declining this past summer ahead of the Federal Reserve’s decision in September to cut its main interest rate for the first time in a year amid signs the labor market was slowing. The Fed lowered its key interest rate again last month, although Fed Chair Jerome Powell cautioned that further rate cuts weren’t guaranteed.

Wall Street traders have reduced their bets that the Fed will cut its main interest rate at its next meeting in December, now giving it a roughly 44 percent probability, according to data from CME Group. That’s down from nearly 70 percent a few weeks ago, but better than the 30 percent chance before the release of the delayed September jobs report.

The central bank doesn’t set mortgage rates, and even when it cuts its short-term rates that doesn’t necessarily mean rates on home loans will necessarily decline.

Last fall, after the Fed cut its rate for the first time in more than four years, mortgage rates marched higher, eventually reaching just above 7 percent in January this year. At that time, the 10-year Treasury yield was climbing toward 5 percent.

Recent forecasts by economists at the National Association of Realtors and First American call for the average rate for a 30-year mortgage to drop to around 6 percent next year.

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August marched forward with a steady drumbeat of new highs, which was uncharacteristic for the month historically, and therefore a surprise to many investors. The S&P 500 rose 1.9 percent for the month, which included setting fresh records in the final stretch, including the S&P’s 20th record close of the year on Aug. 28. The Dow added 3.2 percent in August, and the Nasdaq gained 1.6 percent. The Nasdaq’s poorer performance was mostly weighed down by profit-taking in the semiconductor sector, after Nvidia’s blowout quarter of AI semiconductor chip sales failed to meet the market’s increasingly lofty expectations. Sometimes good news just isn’t good enough when stocks are priced for perfection.

Speaking of perfection, gold decided to join the party in earnest. The “barbarous relic,” as renowned economist John Maynard Keynes called it, touched $3,533 per ounce on Sept. 2, making fresh all-time highs as investors sought refuge from an increasingly uncertain world. When the 30-year Treasury bond flirts with 5 percent (as it did in early September) and questions swirl about central bank independence, even traditionalists start eyeing alternatives. Gold’s 42 percent year-to-date surge tells you everything you need to know about diminishing confidence in paper currencies, including in the world’s reserve currency, the U.S. dollar.

Never mind that gold pays no dividend, costs money to store, and has historically been a lousy investment over long periods. In uncertain times like these, it’s sometimes about return of capital rather than return on capital. When investors pay up for ballast during an equity rally, one should pay attention.

Under the surface, market breadth improved. Small caps finally showed some spark, with the Russell 2000 up about 7 percent in August, as investors looked for alternatives to the increasing price to earnings multiples of large cap growth stocks. That broadening mattered on days when AI hardware leaders slipped; it kept the tape resilient even as high-expectation names took a breather.

Nevertheless, market leadership still hinged on AI infrastructure. Nvidia’s $4 trillion in market value milestone reached in July set the tone coming into August. The market’s growth pulse held up enough, even as tech leadership wobbled on the last trading day of August.  The backdrop for markets making new highs has been earnings doing the lifting and continued confirmation of massive AI capital spending, not just multiple expansion. Around month-end, however, a mixed read-through from AI-linked earnings began to impact much of the tech sector, resulting in a tech sell-off on the first trading day after the Labor Day weekend. The lesson is as old as the tape: when expectations tower, even good news can be “not good enough.”

Rates, meanwhile, reminded everyone they’re still a main character in the valuation chapter, since they offer investors an alternative to cash and equities. The U.S. 30-year Treasury bond yield pushed toward 5 percent to start September, amid a heavy calendar of new issues to fund deficits and a global bond selloff related to concerns about U.S. Federal Reserve independence. When the long bond flirts with 5 percent, dependable cash flows matter more to traders and investors, and narratives about company growth prospects, less, often resulting in a rotation out of stocks and into bonds. Such a rotation brings money out of equities, lowering their prices, which then results in bond yields coming down, and a cycling back into equities as their returns again look more attractive. All asset classes continue to be fed by years of expansionary fiscal and monetary policies, fueling an excess supply of global liquidity.

The Federal Reserve’s annual late August retreat in Jackson Hole, Wyoming, typically offers global central bankers a chance to pontificate about esoteric monetary policy while enjoying some fly fishing. This year, it turned into political theater. A weaker than previously reported jobs report had led to the unprecedented firing of the head of the Bureau of Labor Statistics. In part due to this revised data, Federal Reserve Chair Jerome Powell signaled that rate cuts might finally be on the horizon, suggesting “the time has come for policy to adjust.” The market loved it, with the S&P jumping 1.5 percent that day. But the celebration was soon tempered by relentless political pressure on the Fed.

Which brings us to the latest elephant in the room: the attempt to remove Fed Governor Lisa Cook. President Trump’s move to fire Cook over unsubstantiated mortgage fraud allegations represents the first such attempt by a president to manipulate the Board of Governors in the Fed’s 111-year history. Cook, for her part, isn’t going quietly. She is suing to keep her job, arguing that unproven allegations don’t constitute “cause” for removal under the Federal Reserve Act. As this column is being written, the matter is tied up in the courts, where it belongs.

The markets have absorbed plenty of political theater this year, but this takes the cake. The Federal Reserve’s independence isn’t just some quaint tradition; it’s the bedrock of a sound global monetary system. Uncertainty about possible political manipulation of the debt markets, interest rates, the value of the U.S. dollar and liquidity caused global investors to start to look for alternative investments to U.S. Treasuries. And nervous markets are volatile markets.

The whole episode reminds one of another axiom: the market hates uncertainty. And in this situation, markets have uncertainty in spades.

With all this drama, you might think it’s time to head for the exits. Not so fast. Yes, we’re in uncharted territory with record valuations, political interference in monetary policy, and geopolitical tensions that would make a Cold War diplomat nervous. But that’s precisely when discipline matters most. The market has climbed a wall of worry for 16 years now, through pandemics, wars, banking crises, and more political drama than Shakespeare could have imagined. Those who stayed the course have been rewarded. Those who tried to time the market based on headlines have mostly been wrong.

The advice in this column remains boringly consistent: maintain a diversified portfolio of quality companies with strong balance sheets and sustainable competitive advantages. Volatile markets always provide opportunities. And don’t let politics drive your investment decisions. Markets do not move in straight lines, but they have rewarded discipline and time invested.

As for gold hitting new highs? Sure, it’s nice to see the gold bugs finally having their day. But remember, over the long term, stocks in growing, cash generating companies have trounced gold by a wide margin.

The road ahead will be bumpy. Between Fed independence under assault, valuations stretched, numerous and growing court challenges to White House edicts and a year of special elections promising more fireworks than the Fourth of July, volatility is virtually guaranteed. But volatility is the price we pay for long-term returns.

Stay invested. Stay diversified. The market will do what it does, regardless of what any of us think about it or politics. Excess global liquidity is still spiking the punch bowl. Our job is to stay the course and take advantage of opportunities when the market serves them up.

William Rutherford is the founder and portfolio manager of Portland-based Rutherford Investment Management. Contact him at 888-755-6546 or wrutherford@rutherfordinvestment.com. Information herein is from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Investment involves risk and may result in losses.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

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The average rate for a 30-year U.S. mortgage has fallen to its lowest level in nearly 10 months, giving prospective homebuyers a sorely needed boost in purchasing power that could help inject life into a stagnant housing market.

The long-term rate dropped from 6.63 percent to 6.58 percent last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.49 percent.

Borrowing costs for 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell. The average rate dropped from 5.75 percent to 5.71 percent last week. A year ago, it was 5.66 percent, Freddie Mac said.

Elevated mortgage rates have helped keep the U.S. housing market in a sales slump since early 2022, when rates started to climb from the rock-bottom lows they reached during the pandemic. Home sales sank last year to their lowest level in nearly 30 years.

This is the fourth week in a row that rates have come down. The average rate for a 30-year mortgage is now at its lowest level since Oct. 24, when it averaged 6.54 percent.

Mortgage rates are influenced by several factors, such as the Federal Reserve‘s interest rate policy decisions and bond market investors’ expectations for the economy and inflation.

The main barometer is the 10-year Treasury yield, which lenders use as a guide to price home loans. The yield was at 4.29 percent at midday on Thursday, up slightly from 4.24 percent late Wednesday.

The yield has come down the last couple of weeks after weaker-than-expected July U.S. job market data fueled speculation that the Fed will cut its main short-term interest rate next month.

A Fed rate cut could give the job market and overall economy a boost, but it could also fuel inflation just as President Trump’s tariff policies risk raising prices for U.S. consumers.

Meanwhile, a new inflation report Thursday showed prices at the U.S. wholesale level jumped 3.3 percent last month from a year earlier. That was well above the 2.5 percent rate that economists had forecast, and it could hint at higher inflation ahead.

Earlier this week, the Labor Department said consumer prices in July, though unchanged from June, rose 2.7 percent from a year earlier.

Higher inflation could push bond yields higher, driving mortgage rates upward in turn, even if the Fed cuts its key rate.

Economists generally expect the average rate for a 30-year mortgage to remain above 6 percent this year. Recent forecasts by Realtor.com and Fannie Mae project the average rate will ease to around 6.4 percent by the end of this year.

That may not be low enough to make a difference. While trends like declining home listing prices and more properties on the market in the Sunbelt and West now favor buyers, affordability remains a major hurdle for many aspiring homeowners.

Home price growth has slowed nationally, but the median sales price of a previously occupied U.S. home still climbed to an all-time high of $435,300 in June.

“Homebuyers who have been relegated to the sidelines by high financing costs got some encouragement in the past two weeks, but it remains to be seen if it’s enough to get more of them back in the game,” said Joel Berner, senior economist at Realtor.com.

The recent drop in mortgage rates has spurred many homeowners to refinance, however.

Mortgage applications jumped 10.9 percent last week from the previous week as rates eased, boosted by homeowners seeking to refinance, according to the Mortgage Bankers Association.

Home loan refinance applications made up nearly 47 percent of all mortgage applications. Refi loan applications jumped 23 percent from a week earlier – the strongest showing since April.

Meanwhile, applications for adjustable-rate mortgages, or ARMs, soared 25 percent to their highest level since 2022, MBA said.

Many homeowners aren’t waiting for rates to ease further before refinancing. Cash-out home refinancing activity surged to a nearly three-year high in the April-June quarter, as homeowners tapped some of the equity gains built up after years of soaring home prices.

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WASHINGTON — The Federal Reserve, one of the most powerful financial institutions in the world, is receiving a $2.5 billion renovation involving two of its office buildings.

The project has become an for the embattled chair of the Fed, Jerome Powell, as he weathers nearly incessant personal attacks from President Donald Trump.

Trump has been clear about what he wants from Powell, whom he appointed to lead the central bank in 2017: lower interest rates. Yet the Fed is intended to be an independent agency, and the Supreme Court has signaled that the president can’t fire Powell just because the Fed chair won’t cut rates as fast as Trump wants. But he might be able to do so “for cause,” meaning some kind of malfeasance or neglect. Trump last week suggested that the escalating construction costs could be grounds to fire Powell.

With that threat looming in the background, the Fed decided to open the site of its massive project to a few journalists.

A massive project is revealed

On July 24, Fed staff led a small group of reporters, photographers and television camera operators on an extensive tour of the active construction site that comprises the two 1930s-era buildings. The renovation began in 2022, and the Fed hopes to complete it in the fall of 2027.

By providing journalists — and, by extension, the public — such extensive access, the Fed clearly hopes that greater transparency will help beat back the criticism emanating from the White House. Trump toured the same site several hours after the reporters and then downplayed his threats to fire the Fed chair.

In June, Sen. Tim Scott, R-S.C., the chairman of the Senate Banking Committee, which oversees the Fed, suggested the rebuild has been extravagant, and includes “rooftop terraces, custom elevators that open into VIP dining rooms, white marble finishes and even a private art collection.”

Fed staff, who requested anonymity to discuss the renovation, showed reporters what they said are future conference rooms that are sometimes used for meals, not “VIP dining rooms.” An elevator is being upgraded to increase accessibility to people with disabilities. And some white marble finishes were added at the insistence of a local commission (including several Trump appointees), the staff noted.

The journalists walked around dumpsters and pipes and evaded front-end loaders, while occasionally straining to hear the explanations of Fed staff over the sounds of drilling, cutting and hammering. Approximately 700 to 800 workers are involved in the project across two shifts each day. Reporters visited the roof of the Fed’s main headquarters, the Marriner S. Eccles building, which has sweeping views of the Lincoln Memorial, the National Mall and parts of downtown Washington.

Fed staff said the roof would not have “rooftop terraces” but instead would include grass and other plants as part of a “green roof” that would reduce cooling costs and stormwater runoff. There had been plans for a seating area, but that aspect was removed because it appeared to be an amenity.

Fed staff breaks down costs

The staff sought to highlight the many costs they said were largely out of their control: blast-resistant windows and other security upgrades, modern electronics and HVAC systems, and historic preservation efforts that led to the use of more marble.

The workers also used plywood extensively to protect stairs and many wall coverings, which Trump singled out as too costly.

“You saw the protection of plywood,” Trump told reporters after his tour. “I mean, that was a lot of money just to protect it for a period of time. I would have done it very gingerly and easily and not have to spend millions of dollars on protection.”

It is clearly a massive project. The Fed has shut down a street that runs between the two buildings. Underneath will be a part of a parking garage, as well as a tunnel connecting the two renovated buildings. After the project the Fed will be able to house more of its 3,000 employees in the two buildings and reduce its rented office space, officials said.

After his own tour, Trump appeared to lower the temperature around the project, at least for now, in a post on his social media platform Truth Social: “The cost overruns are substantial but, on the positive side, our Country is doing very well and can afford just about anything — Even the cost of this building!”

Should Powell lead the charge to cut the Fed’s short-term interest rates soon — economists say it could happen in September — that could appease Trump. And after that, you may never hear about the Fed’s renovation again.

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As the Federal Reserve carried out its battle against inflation, consequences arose that were unintended: The banking system suffered the biggest bank failure in years. Silicon Valley Bank, a 40-year-old institution centered in Santa Clara, California, suffered a run and had to close. The failure was sudden. The bank had been wobbly for a brief time, but failed suddenly when a small, closely connected group of large depositors demanded their money in a classic “run on the bank.”

The bank, thought to be well-capitalized, had to close upon revelation that it had a considerable amount of its assets invested in bonds, whose value had declined as interest rates rose. When interest rates were abnormally low, Silicon Valley Bank loaded up on long-term government bonds, which were thought to be risk free. When the Fed raised interest rates at the sharpest pace in 40 years, bond prices plunged and the bank’s equity, when its assets were marked to market value, was wiped out.

The discovery of this caused venture capital funds to lose confidence in the bank’s finances and instruct their portfolio companies, who were concentrated in Silicon Valley, to withdraw their money. Paper losses became real losses, as the bank had to sell bonds before maturity at a loss. So, what took 40 years to create disappeared in the blink of an eye, because of the bank buying long-term bonds to fund demand deposits. Apparently bank regulators had flagged this mismatch at the bank for some time, but that is all they did.

With the bank run, regulators acted quickly to sell the bank, but no buyers could be found. This startling news started a bank run contagion with problems that threatened to spread further in the banking system. More effort was needed before the panic spread to other banks and so the U.S. Treasury stepped in to backstop all the depositors, thereby saving thousands of companies and jobs. The shareholders of Silicon Valley Bank and Signature Bank – a New York City bank that failed at the same time – were wiped out.

The panic spread to Europe, where another bank, Credit Suisse, saw a run. That ultimately threatened the rest of Europe when it was discovered that not even the gnomes of Switzerland could avoid the loss of confidence in its fabled system. Finally, the Swiss government stood up and stopped the run by getting UBS to buy all of Credit Suisse. Only then was relative calm restored, but not before vast sums of money evaporated.

Rising interest rates had left the global banking system vulnerable. It was a stark reminder that the system is still subject to risks that were not appreciated by a new generation of investors and traders. It was a reminder how close the markets, reliant on confidence in the system, are to a sudden meltdown. Banking regulators stepped in to shore up the banks, both here and abroad. The effort worked, until the next time.

Jamie Dimon, CEO of JPMorgan Chase, the largest U.S. bank, said the damage from this meltdown will last a long time. A side effect of the bank run is a flight to quality. Deposits left small banks for large, well-funded banks, causing lost deposits in the small, regional and community banks. Could this ignite another bank failure? It might. It is too soon to know. Certainly, this shift of assets will decrease liquidity available to small businesses, which will curtail their hiring and investment plans and slow the economy further. Local banks know their customers and provide the capital for their expansion. Money center banks do not.

Investors learned many lessons from this banking imbroglio: No bond is risk free. Banks can fail. Bank deposit insurance has limits. It is wise for individuals and companies to pay attention to these limits and diversify one’s deposits.

What is the Fed to do now? Lowering interest rates would be one solution, but the Fed is reluctant to do so in its fight against inflation for fear it would reignite inflation. Raising interest rates is what got us into this mess, so that does not appear a good alternative. Federal Reserve Chair Jerome Powell says that raising interest rates would cause a recession. The market appears to be doing the Fed’s work as interest rates are sliding. Perhaps if we let the market do its work, we can get out of this mess. Our confidence is in the market.

What is an investor to do? It will come as no surprise that we recommend investing in a well-diversified portfolio for the long term. U.S. Treasury Secretary Janet Yellen said in a generally positive remark that the economy is strong, and inflation is abating. We have counted on her in the past. Can we count on her now?

William Rutherford is the founder and portfolio manager of Portland-based Rutherford Investment Management. Contact him at 888-755-6546 or wrutherford@rutherfordinvestment.com. Information herein is from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Investment involves risk and may result in losses.

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91��Ƶ guarantees the accuracy or completeness of any information published herein.

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