In its latest Primary Mortgage Market Survey, the Federal Home Loan Mortgage Corporation (Freddie Mac) revealed that 30-year fixed rate mortgages averaged 7.18 per cent, up from last week when they were 7.12 per cent. A year ago, the average was 6.02 per cent.
Sam Khater, Freddie Mac’s chief economist, highlighted the strength of the economy and rising inflation as the key causes of the rate spike.
He said: “Mortgage rates inched back up this week and remain anchored north of seven per cent. The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated.
“However, potential homebuyers can still benefit during these times of high mortgage rates by shopping around for the best rate quote. Freddie Mac research suggests homebuyers can potentially save $600-$1,200 annually by applying for mortgages from multiple lenders.”
The 15-year fixed rate mortgage averaged 6.51 per cent, down from 6.52 per cent a week ago. A year ago, the average stood at 5.21 per cent.
Rates up, applications down
A separate weekly survey from the Mortgage Bankers Association (MBA) also revealed continued high rates and a dramatic drop-off in applications.
The MBA reported that the average rate for 30-year fixed rate mortgages was 7.27 per cent, up from 7.21 per cent last week. The average rate for the 15-year equivalents increased to 6.72 per cent from 6.66 per cent last week.
The MBA survey also revealed that mortgage applications had decreased by 0.8 per cent from one week earlier, on the back of rising rates and low housing stock.
Joel Kan, MBA’s vice president and deputy chief economist, said: “Mortgage applications decreased for the seventh time in eight weeks, reaching the lowest level since 1996. Last week’s decline was driven by a five per cent drop in refinance applications to the weakest reading since January 2023.
“The 30-year fixed mortgage rate increased to 7.27 per cent last week and was 40 basis points higher than where it was in late July. Given how high rates are right now, there continues to be minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate.”
