In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 6.57 per cent, up from last week when it stood at 6.39 per cent. A year ago, the average was 5.10 per cent.
Higher rates and limited supply mean that affordability issues continue to impact the US market, according to Sam Khater, Freddie Mac’s chief economist.
He said: “The US economy is showing continued resilience which, combined with debt ceiling concerns, led to higher mortgage rates this week.
“Dampened affordability remains an issue for interested homebuyers and homeowners seem unwilling to lose their low rate and put their home on the market. If this predicament continues to limit supply, it could open up an opportunity for builders to help address the country’s housing shortage.”
The 15-year fixed rate mortgage also increased from last week, averaging 5.97 per cent, up from 5.75 per cent last week. A year ago the average was 4.31 per cent.
Rate at its highest since March
A separate weekly survey from the Mortgage Bankers Association (MBA) also saw rates rise.
The MBA reported that the interest rate for 30-year fixed rate mortgages increased to 6.69 per cent from 6.57 per cent a week earlier, while the average rate for the 15-year equivalents grew to 6.15 per cent from 5.96 per cent a week ago.
The rise in rates saw applications decrease by five per cent from one week earlier.
Joel Kan, MBA’s vice president and deputy chief economist, said: “Mortgage applications declined almost five per cent last week as borrowers remained sensitive to higher rates. The 30-year fixed rate increased to 6.69 per cent, the highest level since March.
“Since rates have been so volatile and for-sale inventory still scarce, we have yet to see sustained growth in purchase applications. Refinance activity remains limited, with the refinance index falling to its lowest level in two months and more than 40 percent below last year’s pace.
“Investors remained attuned to the uncertainty around the US debt ceiling [the limit that Congress sets on the amount that the government can borrow] and communication from several Federal Reserve officials last week, which sent Treasury yields higher, along with mortgage rates. Economic data released over the past week have also pointed to a still-resilient economy. The housing market received positive data on new residential construction – which is seen as a key solution to the lack of housing inventory.”
