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US 30-year fixed-rate mortgage approaches 7%

BY Reuters | AGENCY | 12:17 PM EST

WASHINGTON, Nov 21 (Reuters) - U.S. mortgage rates increased to a four-month high this week, which together with higher home prices could sideline potential buyers from the housing market in the near term.

The average rate on the popular 30-year fixed-rate mortgage increased to 6.84%, the highest level since July, from 6.785% last week, mortgage finance agency Freddie Mac said on Thursday. It averaged 7.29% during the same period a year ago.

Though the Federal Reserve has cut interest rates twice since September, U.S. Treasury yields have risen on strong economic data and investor fears that President-elect Donald Trump's policies, including higher tariffs on imported goods and mass deportations, could reignite inflation.

Mortgage rates track the 10-year Treasury note. (Reporting By Lucia Mutikani)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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