In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 6.65 per cent, up from last week when it averaged 6.50 percent. A year ago, the average was 3.76 per cent.
Freddie Mac put the rise down to inflationary and also noted how affordability was shrinking for both first-time and ‘repeat’ buyers.
Sam Khater, Freddie Mac’s chief economist, said: “As we started the year, the 30-year fixed rate mortgage decreased with expectations of lower economic growth, inflation and a loosening of monetary policy. However, given sustained economic growth and continued inflation, mortgage rates boomeranged and are inching up toward seven per cent.
“Lower mortgage rates back in January brought buyers back into the market. Now that rates are moving up, affordability is hindered and making it difficult for potential buyers to act, particularly for repeat buyers with existing mortgages at less than half of current rates.”
Meanwhile, the 15-year fixed rate mortgage averaged 5.89 per cent, up from last week when it averaged 5.76 per cent. A year ago at this time, the average was just 3.01 per cent.
Inflation puts pressure on rates
A separate weekly survey from the Mortgage Bankers Association (MBA) found that 30-year rates were also creeping towards seven per cent, along with their 15-year equivalents.
The MBA reported that the interest rate for 30-year fixed rate mortgages rose to 6.71 per cent from 6.62 per cent a week earlier, while the average rate for the 15-year equivalents grew to 6.13 per cent from 5.98 per cent a week ago. Meanwhile, applications also tumbled.
Joel Kan, MBA’s vice president and deputy chief economist said: “The 30-year fixed rate increased to 6.71 per cent last week, the highest rate since November 2022, which drove a six per cent drop in applications.
“After a brief revival in application activity in January when mortgage rates dropped to 6.2 per cent, there has now been three straight weeks of declines in applications as mortgage rates have jumped 50 basis points over the past month.
“Data on inflation, employment, and economic activity have signalled that inflation may not be cooling as quickly as anticipated, which continues to put upward pressure on rates.”
