Mortgage rates jumped again this week, a third consecutive increase, pushing sub-6% rates further out of reach.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage rate averaged 6.50%, up from 6.32% the week prior.
A year ago at this time, the 30-year FRM averaged 3.89%.
The 15-year fixed-rate mortgage rose from 5.76% to 5.51%. A year ago, it averaged 3.14%.
“The economy continues to show strength, and interest rates are repricing to account for the stronger than expected growth, tight labor market and the threat of sticky inflation,” said Sam Khater, Freddie Mac’s Chief Economist.
“Our research shows that rate dispersion increases as mortgage rates trend up. This means homebuyers can potentially save $600 to $1,200 annually by taking the time to shop among lenders to find a better rate.”
Rates are down a full point from their 2022 peak of 7.12%, which at first drew some buyers off the sidelines.
Demand has been dampened by rising rates, but Americans are still buying houses. While the homeownership rate isn’t breaking records, it is higher than the historical average of 65.6%.
“Despite higher mortgage rates, the homeownership rate rose in 2022. Even though many buyers were priced out due to historic low affordability, more Americans were able to become homeowners,” said Nadia Evangelou, National Association of Realtors senior economist and director of real estate research.
She noted that for Americans who can make a 20% downpayment, owning a home is still affordable even in a high-rate environment.
A 20% down payment isn’t feasible for everyone, however. A recent measure from the Biden Administration is aimed at addressing affordability for people who put down less than 20% by cutting mortgage insurance costs for people who choose FHA loans.
NAR President Kenny Parcell agreed with the move, saying it would help potential buyers fighting to find an affordable home. “NAR has continuously advocated for responsibly reducing mortgage insurance premiums to help qualified home buyers struggling with affordability in the current environment, and we applaud the Administration for this action,” he said in a statement.
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— The Mortgage Note (@TheMortgageNote) February 23, 2023
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