Rates Soar, Jumping 10 BPS

Mortgage rates reversed course last week, jumping 10 bps in one week to their highest point of the year so far.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.81%, up from 6.71% the week prior.

A year ago at this time, the 30-year FRM averaged 5.30%.

The 15-year fixed-rate mortgage shot up as well, from 6.06% to 6.24%. A year ago, it averaged 4.45%.

“This upward trend is being driven by a resilient economy, persistent inflation, and a more hawkish tone from the Federal Reserve. These high rates combined with low inventory continue to price many potential homebuyers out of the market,” said Sam Khater, Freddie Mac’s Chief Economist.

Minutes from the most recent FOMC meeting revealed intense debate around the question of further tightening.

While almost all Federal Reserve officials agreed that more increases are necessary, they disagreed on the number and pace of those hikes.

In remarks after the June meeting, Fed Chairman Jerome Powell said the country has “a long way to go” to the Fed’s preferred 2% inflation rate.

Housing affordability worsened in 98% of the U.S. last quarter. Data from ATTOM shows the price for a median single-family home rose 10% quarter to quarter, reaching $350,000.

The average American must now spend 33% of their income on housing, passing the cost-burdened threshold of 30%.

“Whether this is just a temporary blip amid this year’s peak buying season or a sign of another extended price surge is anyone’s guess,” ATTOM CEO Rob Barber commented.

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