Rates Shoot Back Above 7%, Veterans Expect Housing Search To Be “Challenging”

Mortgage interest rates tipped back over 7% last week, continuing to yo-yo back and forth from the high 6.90s, Freddie Mac reported Thursday.

Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 7.08%, up from 6.95% the week prior.

A year ago at this time, the 30-year FRM averaged 2.98%.

“As the housing market adjusts to rapidly tightening monetary policy, mortgage rates again surpassed 7%,” said Sam Khater, Freddie Mac’s Chief Economist. 

“The housing market is the most interest-rate sensitive segment of the economy, and the impact rates have on homebuyers continues to evolve. Home sales have declined significantly and, as we approach year-end, they are not expected to improve.”

Purchase loans ticked up recently after a long stretch of declines, but loan volume overall remains down 0.1%. Rates are expected to become more volatile as Federal Reserve hikes continue, ending the “serene stretch” of the last few weeks.

But for some, the serene stretch never existed. Many Americans have been priced out of the market since the pandemic housing boom began, either losing out in bidding wars or watching interest rates wipe-out their budget.

This Veteran’s Day, housing is especially urgent for military members and their families.

A Freddie Mac survey found that 64% of active-duty servicemembers transitioning to civilian life expect their search for affordable housing to be extremely or somewhat challenging.

The military offers a Basic Housing Allowance (BAH) for active members, while veterans receive a monthly housing allowance. But soaring home price appreciation and record-setting rents have made homebuying difficult for both active military and veterans.

“With the stipend that we’re getting — it’s helpful, but it still doesn’t cover what my mortgage is,” Devon Hicks, a former Navy member, told KPBS News. “That’s where you use your paycheck, or you get a side job or you do Uber or you do Lyft.”

Additional findings from Thursday’s report:

  • 15-year fixed-rate mortgage averaged 6.38% with an average 1.0 point.
  • A year ago at this time, the 15-year FRM averaged 2.27%.
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) rose above 6% to 6.06%, up from the week prior’s 5.71%, with an average 0.2 point.
  • A year ago at this time, the 5-year ARM averaged 2.54%.