Mortgage Rates in the US Jump to 2 Month Highs

Mortgage rates in the US have climbed in recent weeks after the Federal Reserve ended its support for mortgage-backed securities earlier this year. This move by the Fed was in response to rapid inflation, which is now showing up in rising prices of homes. In order to combat this, the Federal Reserve has increased its key policy rate. Rising rates have hurt home shoppers.

According to Freddie Mac, the average rate for 30-year fixed mortgages increased to 5.51% last week, from 3.55% the week prior. However, it is still more than a quarter point higher than last year. Although the 30-year fixed mortgage rates are near two-year highs, rising rates may push down the affordability of home buying for many.

The Federal Reserve is likely to raise rates once again next month to combat higher inflation. The first quarter of 2018 saw annual inflation spike at the fastest pace in nearly 40 years. This could put a damper on home sales, especially since the average price of gasoline has already exceeded $5 per gallon in 20 states.

Rising mortgage rates may not necessarily cool housing prices, which is what many people think. Rising rates will not stop home prices from rising, but they will make them even more expensive. The good news is that home buyers don’t have to buy a house now – they can refinance later if they need to cut costs or get out of a high interest rate. Despite higher rates, it’s important to remember that the housing market is still experiencing a shortage of homes.

Mortgage rates in the US are accelerating again this week. They are now at their highest levels since January 2020, which could push some homebuyers out of the market. The average 30-year fixed mortgage rate rose by a quarter point last week after remaining flat for three weeks.

While the numbers of mortgage applications have remained stagnant in recent weeks, the volume of refinances and purchases fell slightly. The refinance share of mortgage activity accounted for 30.8 percent of the applications. Meanwhile, the purchase share fell by 4.6 percent. The average purchase loan size last week was $415,000, down from $470,000 a year ago.

Meanwhile, home prices continued to rise in July. The national median home price reached a record $416,000 in June, which was the highest in the US since 1999. Still, mortgage rates rose in July and the median price of a new home rose by 9% from a month ago. This is an indication that would-be homebuyers have lost confidence in their ability to find a home.

These figures are based on surveys conducted by the federally charted mortgage investor, Freddie Mac. The survey covers first-lien, conventional conforming home purchase mortgages with a loan-to-value ratio of 80 percent. Mortgage rates are based on a sample of lenders, roughly proportional to the overall mortgage business nationwide.

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