In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 6.73 per cent, up from last week when it averaged 6.65 percent. A year ago, the average was 3.85 per cent.

Freddie Mac highlighted the Federal Reserve’s fear over rising inflation and the potential for greater tightening were pushing rate upwards and forcing buyers onto the sidelines at a time when homebuying traditionally increases.

Sam Khater, Freddie Mac’s chief economist, said: “Mortgage rates continue their upward trajectory as the Federal Reserve signals a more aggressive stance on monetary policy.”

“Overall, consumers are spending in sectors that are not interest rate sensitive, such as travel and dining out. However, rate-sensitive sectors, such as housing, continue to be adversely affected. As a result, would-be homebuyers continue to face the compounding challenges of affordability and low inventory.”

Meanwhile, the 15-year fixed rate mortgage averaged 5.95 per cent, up from last week when it averaged 5.85 per cent. A year ago at this time, the average was just 3.09 per cent.

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Applications inch up despite rate rise

A separate weekly survey from the Mortgage Bankers Association (MBA) found that 30-year rates were also creeping up, along with their 15-year equivalents.

The MBA reported that the interest rate for 30-year fixed rate mortgages rose to 6.79 per cent from 6.71 per cent a week earlier, while the average rate for the 15-year equivalents grew to 6.25 per cent from 6.13 per cent a week ago. However, despite the spikes, mortgage applications were up on recent weeks, though way down on the same time a year ago.

Joel Kan, MBA’s vice president and deputy chief economist said: “Mortgage rates continued to increase last week. The 30-year fixed rate rose to 6.79 per cent – the highest level since November 2022 and 270 basis points higher than a year ago.

“Even with higher rates, there was an uptick in applications last week, but this was in comparison to two weeks of declines to very low levels, including a holiday week. Comparing the application indices from a year ago, purchase applications were still down 42 per cent, and refinance activity was down 76 per cent. Many borrowers are waiting on the sidelines for rates to come back down.”