Mortgage rates spiked again last week, contributing to housing becoming less affordable than before the bubble burst in the 2000s.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.23%, up from 7.09%. A year ago at this time, the 30-year FRM averaged 5.55%.
The 15-year fixed-rate mortgage also increased to 6.55% from 6.46%. A year ago, it averaged 4.85%.
“The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb,” said Sam Khater, Freddie Mac’s Chief Economist.
Khater expects economic strength to keep rates elevated in the short term, leading to further declines in home resale.
A strong jobs report recently sent treasury yields higher, putting upward pressure on rates.
Markets are struggling against illiquidity and fear that stubborn inflation will stick around.
“The general rule is that good news is bad for mortgage rates,” Sarah Alvarez, VP of mortgage banking at William Raveis Mortgage told SFGate. “So while it is heartening to see that the jobs in our economy remain busy, it has a buoying effect on rates currently.”
The Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor dipped to a concerning low for June, with the estimated annual total payment share of median income at 43%. The cost-burdened threshold is typically set at 30%.
Though existing home sales remain in a slump, new construction is booming, leading to old and new houses costing basically the same and making them more attractive to homebuyers.
“[T]here are slightly more new homes available, and sales of these new homes continue to rise, helping provide modest relief to the unyielding housing inventory predicament,” Khater said.
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