U.S. 30-Year Mortgage Rates Climb for Seventh Consecutive Week, Hitting 7.79%

For the seventh week in a row, the average rate of the standard 30-year mortgage in the United States has escalated, making home ownership increasingly unaffordable for Americans.

Freddie Mac announced on Thursday that the rate for a 30-year fixed mortgage has reached 7.79%, up from 7.63% the previous week. This is a notable increase from the 7.08% rate recorded a year ago.

Rising mortgage rates can significantly impact borrowers, adding hundreds of dollars to monthly payments and making an already inaccessible housing market even more unattainable for many U.S. citizens. The high rates also deter current homeowners who secured much lower rates around 3% two years ago from putting their homes on the market.

According to the Mortgage Bankers Association, the national median mortgage payment stood at $2,155 in September, an 11% increase—equivalent to an additional $214—from the same period last year.

Meanwhile, sales of pre-owned homes in the United States continued to decline in September, marking the fourth consecutive month of decreased sales and the slowest rate of sales in over a decade.

Freddie Mac’s chief economist, Sam Khater, stated, “The market for purchasing homes has virtually come to a halt, affordability continues to be a major obstacle for many, and the only solutions are lower rates and increased housing supply.”

For the 15-year loan, rates have increased to 7.03% from 6.92%, up from 6.36% a year ago. These elevated rates have resulted in reduced applications for new mortgages. The Mortgage Bankers Association reported on Wednesday that new loan applications have reached their slowest weekly pace since 1995. Simultaneously, the proportion of applications for adjustable-rate mortgages climbed to 9.5%, the highest since November of last year.

The increased cost of home financing has significantly disrupted the U.S. housing market. Millions of Americans, who had locked in mortgage rates as low as 3% two years ago, find it financially prohibitive to move due to the current cost of borrowing.

Data from the National Association of Realtors revealed that not only did the sales of existing homes decrease for the fourth month in a row, but the rate of these sales also slowed to the lowest levels in more than ten years. In contrast, the pace of new home sales has exceeded economists’ expectations. In the previous month, new home sales surged to 759,000, approximately 79,000 more than anticipated.

Bill Adams, Chief Economist at Comerica, highlighted that home builders are the unexpected beneficiaries of the Federal Reserve’s attempts to mitigate inflation via interest rate hikes. “Homebuilders are leveraging interest rate incentives to channel demand towards newly constructed homes, and are also reducing floor plans to enhance affordability,” he noted.

Mortgage rates are closely tied to the 10-year Treasury yield, which is used by lenders to set loan prices. Factors such as investor expectations for future inflation, global appetite for U.S. Treasuries, and Federal Reserve policy actions can influence mortgage rates. The ongoing threat of sustained higher rates has driven the 10-year Treasury yield to its highest levels in over a decade, hitting 5% earlier this week and settling at 4.89% during midday trading on Thursday. This is a stark rise from the approximately 3.50% seen in May and a mere 0.50% at the early stages of the pandemic.

Frequently Asked Questions (FAQs) about Mortgage Rates

More about Mortgage Rates

• Freddie Mac’s Latest Mortgage Rate Data
• Mortgage Bankers Association Statistics
• National Association of Realtors Monthly Sales Report
• Federal Reserve Interest Rate Announcements
• U.S. 10-Year Treasury Yield Historical Data
• Analysis by Chief Economist at Comerica
• U.S. Housing Market Trends
• Impact of Federal Reserve Policy on Mortgage Rates