Mortgage rates increased for the fourth week in a row, as the U.S. economy continues to show signs of strength while inflation is only slowly subsiding.
The 30-year fixed-rate mortgage averaged 7.09% as of Aug 17, according to data released by Freddie Mac FMCC, +17.50% on Thursday.
The last time rates were this high was in April 2002 at 7.13%.
It’s up 13 basis points from the previous week — one basis point is equal to one hundredth of a percentage point. The 30-year was at 6.96% the previous week.
A year ago, the 30-year was averaging at 5.13%.
The average rate on the 15-year mortgage rose to 6.46% from 6.34% last week. The 15-year was at 4.55% a year ago.
Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage.
Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging at 7.37% as of August 17.
What Freddie Mac said: “The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb,” Sam Khater, chief economist at Freddie Mac, said in a statement.
The 10-year Treasury note BX:TMUBMUSD10Y crossed 4.3% as of midday Thursday.
“Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales,” Khater added.
What are they saying? Even after the 30-year rate crossed 7% last November, the “housing market has been surprisingly resilient … [but] with prices even higher than they were a year ago in many markets, crossing the 7% mortgage rate threshold again could be what sets in motion a major contraction in the housing market this fall,” Lisa Sturtevant, chief economist at Bright MLS, told MarketWatch.
“High mortgage rates will keep more buyers out of the market, but they also will continue to sideline sellers, contracting both sides of the market,” she added, so “even though the overall housing market will be cool this fall, don’t expect large price drops in most local markets.”