ECONOMY
US Mortgage Rates Climb For Seventh Week In A Row, Nearing 8%
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U.S. mortgage rates climbed again this week, putting home ownership even further out of reach for many Americans, according to data released Thursday by the Federal Home Loan Mortgage Corporation, or Freddie Mac.
The average rate on a 30-year fixed-rate mortgage rose to 7.79% as of Oct. 26, up from 7.63% last week, and up from 7.08% a year ago, according to Freddie Mac’s Primary Mortgage Market Survey.
The average rate on a 15-year home loan rose to 7.03%, up from 6.92% last week, and up from 6.36% a year ago.
“For the seventh week in a row, mortgage rates continued to climb toward eight percent, resulting in the longest consecutive rise since the Spring of 2022,” Sam Khater, Freddie Macs chief economist, said in a statement. “Rates have risen two full percentage points in 2023 alone and, as we head into Halloween, the impacts may scare potential homebuyers. Purchase activity has slowed to a virtual standstill, affordability remains a significant hurdle for many and the only way to address it is lower rates and greater inventory.”
Mortgage applications have been steadily decreasing as rates have climbed, according to the latest weekly survey from the Mortgage Bankers Association. For the week ending Oct. 20, applications declined 1% from the week before, according to the MBA.
“Mortgage activity continued to stall, with applications dipping to the slowest weekly pace since 1995, Joel Kan, MBAs vice president and deputy chief economist said in a statement. These higher mortgage rates are keeping prospective homebuyers out of the market and continue to suppress refinance activity. The ARM share of applications inched up to 9.5 percent, its highest since November 2022.”
U.S. sales of existing homes fell in September to the lowest level in 13 years, since the foreclosure crisis, thanks to surging interest rates, skyrocketing home prices skyrocket, and persistently low inventory, according to a report last week from the National Association of Realtors.
U.S. sales of previously occupied homes including single-family homes, townhomes, condominiums and co-ops in September fell 2% from the month before, and 15.4% from last year, the NAR said.
Total housing inventory at the end of September was 1.13 million units, up 2.7% from August but down 8.1% from one year ago. The median price for existing housing of all types in September was $394,300, an increase of 2.8% from September 2022.
As has been the case throughout this year, limited inventory and low housing affordability continue to hamper home sales. The Federal Reserve simply cannot keep raising interest rates in light of softening inflation and weakening job gains, NAR Chief Economist Lawrence Yun said in a statement.
For the third straight month, home prices are up from a year ago, confirming the pressing need for more housing supply, Yun said.
Speaking at the Economic Club of New York last week, Federal Reserve Chairman Jerome Powell said inflation is still too high, indicating another rate hike could be coming after the Federal Open Market Committee meeting at the end of the month.
The Federal Reserve last month decided to hold interest rates steady, maintaining the target range for the federal funds rate at 5.25% to 5.5%, after 18 months of aggressive hikes, citing progress in its battle against inflation.
TMX contributed to this article.
