Rates rise back up as housing market adjusts to tightening monetary policy
After a brief pause last week, mortgage rates increased once again in line with the Federal Reserve’s recent rate hike.
Freddie Mac’s Primary Mortgage Market Survey showed that the 30-year fixed-rate mortgage returned to its record-high of 7.08% – up from 6.95% last week. Compared to a year ago, the average 30-year fixed mortgage rate was 2.98%.
The average 15-year fixed-rate mortgage jumped to 6.38%, up nine basis points from the previous week and a huge bump from last year’s 2.27%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 6.06%, up from 5.95% last week and from 2.53% this time a year ago.
“As the housing market adjusts to rapidly tightening monetary policy, mortgage rates again surpassed seven percent,” said Freddie Mac chief economist Sam Khater. “The housing market is the most interest-rate sensitive segment of the economy, and the impact rates have on homebuyers continues to evolve. Home sales have declined significantly and, as we approach year-end, they are not expected to improve.”
Consumer expectations on mortgage rates also continued to degrade. According to Fannie Mae, the net share of those who think mortgage rates will go down over the next 12 months decreased to just 6%.