In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 6.90 per cent, up from last week when it was 6.81 per cent. A year ago, the average was 4.99 per cent.
Sam Khater, Freddie Mac’s chief economist, noted that the increase came on the back of a stronger economy as well the recent credit downgrade.
He said: “The combination of upbeat economic data and the US government credit rating downgrade caused mortgage rates to rise this week.
“Despite higher rates and lower purchase demand, home prices have increased due to very low unsold inventory.”
The 15-year fixed rate mortgage also rose, averaging 6.25 per cent, up from 6.11 per cent last week. A year ago, the average stood at 4.26 per cent.
Applications down three per cent as rates spike
A separate weekly survey from the Mortgage Bankers Association (MBA) also noted that rates had continued to rise.
The MBA reported that the average rate for 30-year fixed rate mortgages rose to 6.93 per cent from 6.87 per cent last week, while the average rate for the 15-year equivalents increased to 6.39 per cent, from 6.37 per cent last week.
Mortgage applications decreased three per cent from one week earlier, on the back of affordability strictures and a dearth of housing inventory,
Joel Kan, MBA’s vice president and deputy chief economist, said: “Mortgage rates edged higher last week, with the 30-year fixed mortgage rate’s increase to 6.93 per cent leading to another decline in overall applications.
“The purchase index decreased for the third straight week. The decline in purchase activity was driven mainly by weaker conventional purchase application volume, as limited housing inventory and rates still close to seven per cent are crimping affordability for many potential homebuyers.
“The refinance market continues to feel the impact of these higher rates, and applications trailed last year’s pace by over 30 per cent with many homeowners not looking for refinance opportunities.”
