Mortgage Rates Up Full Quarter Point Over One Week
Mortgage rates jumped by a quarter point this week in the wake of another 75-point rate hike from the Central Bank, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 6.29%, up from 6.02% just last week.
A year ago at this time, the 30-year FRM averaged 2.88%.
“The housing market continues to face headwinds as mortgage rates increase again this week, following the 10-year Treasury yield’s jump to its highest level since 2011,” said Sam Khater, Freddie Mac’s Chief Economist.
“Impacted by higher rates, house prices are softening, and home sales have decreased. However, the number of homes for sale remains well below normal levels.”
Existing-home sales dropped for the seventh straight month in August, down 0.4% from July and 19.9% YOY. House prices keep rising, though they are moderating.
Areas that saw big price gains during the pandemic are now susceptible to fast declines, losing their appreciation momentum from the Great Migration. Midwestern markets, which are more affordable, remain hot, while Western markets are comparatively tanking.
“When mortgage rates were below 3%, sales and home prices soared. The market was like a game of musical chairs with buyers vying for too few homes,” said Redfin Chief Economist Daryl Fairweather in an article by Tim Ellis.
“As mortgage rates approached 6%, almost everyone left the party. Now the market is more like a middle school dance where a small number of buyers and sellers are pairing up during a slow song.”
With rates now well above 6% and rising, the dance may completely clear out.
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 5.44% with an average 1.0 point.
- A year ago at this time, the 15-year FRM averaged 2.15%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.97%, with an average 0.4 point.
- A year ago at this time, the 5-year ARM averaged 2.43%.
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