In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 6.39 per cent, up from last week when it stood at 6.27 percent. A year ago, the average was 5.11 per cent.
Experts at Freddie Mac noted, despite more stable house prices, higher mortgage rates meant that demand was still muted.
Sam Khater, Freddie Mac’s chief economist, said: “For the first time in over a month, mortgage rates moved up due to shifting market expectations.
“Home prices have stabilised somewhat, but with supply tight and rates stuck above six per cent, affordable housing continues to be a serious issue for many potential homebuyers. Unless rates drop into the mid five per cent range, demand will only modestly recover.”
Meanwhile, the 15-year fixed rate mortgage averaged 5.76 per cent, up from last week when it averaged 5.54 per cent. A year ago at this time, the average was just 4.38 per cent.
Applications tumble after rates rise
A separate weekly survey from the Mortgage Bankers Association (MBA) also found the same trajectory for 30-year rates and their 15-year equivalents.
The MBA reported that the interest rate for 30-year fixed rate mortgages increased to 6.43 per cent from 6.3 per cent a week earlier, while the average rate for the 15-year equivalents rose to 5.89 per cent from 5.78 per cent a week ago.
Rising rates saw mortgage applications decrease by 8.8 per cent from a week earlier.
Joel Kan, MBA’s vice president and deputy chief economist, said: “Last week’s increase in mortgage rates prompted a pullback in application activity. With more first-time homebuyers in the market, we continue to see increased sensitivity to rate changes.
“The 30-year fixed rate increased 13 basis points to 6.43 percent, which led to purchase applications declining 10 per cent. Affordability challenges persist and there is limited for-sale inventory in many markets across the country, so buyers remain selective on when they act.”
