Mortgage rates hit their highest level in 15 years, continuing a surge that’s likely no longer a big surprise in the market, but not any less painful.
The average 30-year fixed mortgage rate reached 6.7 percent, according to Freddie Mac’s weekly survey of lenders reported by the Wall Street Journal. The figure marks the sixth straight week the average increased and the highest average rate since July 2007.
The unceasing rise in rates comes as the Federal Reserve keeps raising benchmark interest rates in an effort to tamp down inflation, including a raise of three-quarters of a point after its Sept. 21 meeting. Mortgage rates have less to directly do with the Fed’s rates than the 10-year Treasury yield, which is influenced by Fed rate expectations.
Mortgage rates have been on a wild ride since the start of the pandemic, but the increases of late are particularly stark. A week ago, the Mortgage Bankers Association had the average rate at 6.25 percent, while Freddie Mac put it at 6.29 percent. A year ago, Freddie Mac’s average recorded rate was less than half of that, a smidge over 3 percent.
Rates hit record lows at the start of the pandemic, creating an environment for a frenzied housing market. The good times for prospective homebuyers didn’t last, though, and many are feeling pinched by rates, along with the continued rise of sales prices — even if they’re climbing at a slower rate.
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The S&P CoreLogic Case-Shiller Index posted a 2.3 percentage point difference in July from the previous month, the fourth straight month of deceleration and the largest difference recorded in the index’s history.
Home prices may continue to decline as the Fed keeps making moves, but if mortgage rates continue to climb, the combination could complicate back-of-the-napkin math for buyers.
Rising mortgage rates aren’t only impacting homebuyers. They are also having a crushing effect on mortgage, proptech and brokerage firms, forcing layoffs throughout the industry.
— Holden Walter-Warner