Mortgage Rates Break Downward Streak, Rising To 5.23%

Mortgage rates broke their downward streak this week, rising to an average of 5.23%, Freddie Mac reported Thursday.

Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 5.23%, up from last week’s 5.09%. A year ago at this time, the 30-year FRM averaged 2.96%.

“After little movement the last few weeks, mortgage rates rose again on the back of increased economic activity and incoming inflation data,” said Sam Khater, Freddie Mac’s Chief Economist. 

“The housing market is incredibly rate-sensitive, so as mortgage rates increase suddenly, demand again is pulling back. The material decline in purchase activity, combined with the rising supply of homes for sale, will cause a deceleration in price growth to more normal levels, providing some relief for buyers still interested in purchasing a home.”

Mortgage loan application volume dropped by 6.5% last week, the fifth decrease in six weeks. Analysts suggest that as buyers back off due to rising interest rates and soaring prices, the market will cool and ultimately moderate.

However, home prices continue to skyrocket. Some analysts suggest that so long as inventory remains depleted, rising interest rates won’t lead to price moderation.

“The mortgage market is not at this point putting a ceiling on housing prices and housing demand,” Susan Wachter, professor of real estate at the Wharton School of the University of Pennsylvania, told Bankrate.

Additional findings from Thursday’s report:

  • 15-year fixed-rate mortgage averaged 4.38% with an average 0.8 point.
  • A year ago at this time, the 15-year FRM averaged 2.23%.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.12% with an average 0.3 point.
  • A year ago at this time, the 5-year ARM averaged 2.55%.