Mortgage rates exceeded 6% last week for the first time since 2008, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 6.02%, up from 5.89% last week.
A year ago at this time, the 30-year FRM averaged 2.86%.
“Mortgage rates continued to rise alongside hotter-than-expected inflation numbers this week, exceeding six percent for the first time since late 2008,” said Sam Khater, Freddie Mac’s Chief Economist.
Inflation rose more than expected in August, up 8.3% YOY, though prices are down some from record highs earlier this year. Analysts had anticipated an 8.1% YOY increase.
“Today’s evidence of a peak in US CPI might be welcome but the figure of 8.3% was above expectations and only reinforces the need for a further 0.75% increase in interest rates at September’s FOMC meeting. Fed Chair Powell’s Jackson Hole speech called for forceful action to control inflation so the Fed now has to deliver,” Alastair George, chief investment strategist at Edison Group, said.
Rising interest rates should help with the affordable housing crisis by reducing demand and therefore moderating home price growth.
“Although the increase in rates will continue to dampen demand and put downward pressure on home prices, inventory remains inadequate. This indicates that while home price declines will likely continue, they should not be large,” Khater said.
The top 50 markets in the U.S. have already seen price declines, though the rate of acceleration varies. Nationally, house price growth peaked in March at almost 21%, but fell to 18.5% in June.
Additional findings from Thursday’s report:
- 15-year fixed-rate mortgage averaged 5.21% with an average 0.9 point.
- A year ago at this time, the 15-year FRM averaged 2.12%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.93%, with an average 0.2 point.
- A year ago at this time, the 5-year ARM averaged 2.51%.