Mortgage Rates Climb to Highest Level in Over a Year, Freddie Mac Reports
Key Takeaways
- •The average 30-year fixed-rate mortgage rose to 6.69%, reaching its highest level in more than a year.
- •The 15-year fixed-rate mortgage rate declined slightly to 6.01% from 6.04% in the previous week.
- •Freddie Mac's chief economist Sam Khater reported that listing prices are modestly below year-ago levels and for-sale inventory has been improving.
- •Minneapolis Federal Reserve President Neel Kashkari recommended raising interest rates to prevent what he described as an entrenched inflation problem.
- •Higher mortgage rates increase monthly payments for homebuyers and may reduce the number of buyers who can qualify for loans.
Mortgage rates moved higher this week, reaching their highest level in more than a year, according to data released Thursday by Freddie Mac.
The government-sponsored mortgage buyer's latest Primary Mortgage Market Survey showed the average rate on the benchmark 30-year fixed-rate mortgage rose to 6.69%, up from 6.66% the previous week. A year earlier, the average 30-year rate stood at 6.63%.
"While mortgage rates continue to influence affordability, the housing market is showing signs of adjustment, with listing prices modestly below year-ago levels and for-sale inventory improving from the limited supply seen in recent years," said Sam Khater, Freddie Mac's chief economist.
Meanwhile, the average rate on a 15-year fixed-rate mortgage edged lower, falling to 6.01% from 6.04% a week earlier.
Freddie Mac, formally the Federal Home Loan Mortgage Corporation, has conducted its Primary Mortgage Market Survey weekly since 1971, polling lenders across the country on the rates they are offering to highly qualified borrowers. The survey is widely regarded as a benchmark gauge of U.S. mortgage rate trends.
The upward movement in borrowing costs comes against a backdrop of ongoing Federal Reserve efforts to manage inflation. Minneapolis Federal Reserve President Neel Kashkari recently stated that the central bank should raise interest rates now to avoid an "entrenched inflation problem," underscoring the uncertain monetary policy environment facing prospective homebuyers. While the Fed does not set mortgage rates directly, its policy stance influences broader bond market conditions, and 30-year fixed mortgage rates typically track movements in the 10-year Treasury yield, which responds to investor expectations about inflation and the economic outlook.
OSAC Chief Market Strategist Phil Blancato separately advised investors to avoid emotional decision-making when managing their portfolios amid shifting economic conditions.
Higher mortgage rates directly affect monthly payments for homebuyers, increasing the cost of financing a home purchase and potentially dampening demand. The 30-year fixed-rate mortgage remains the most common home loan product in the United States, and rate movements at current levels can meaningfully shift the pool of buyers who can qualify for loans, contributing to the inventory and pricing adjustments Khater described as the market continues to recalibrate.
