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U.S. Mortgage Rates Rise Past 7%
The average rate on 30-year mortgages — the most popular kind among Americans — rose to the highest level since 2002, tracking the Federal Reserve’s aggressive campaign of rate increases.
- Oct. 27, 2022
Weekly average 30-year fixed mortgage rate
Mortgage rates barreled past the 7 percent mark on Thursday to their highest level since 2002, as the Federal Reserve’s aggressive interest rate increases, meant to combat inflation, continued to seep through the economy and weigh increasingly on the housing market.
Rates on 30-year fixed-rate mortgages — the most popular kind among home buyers in the United States — rose to 7.08 percent, up from 6.94 percent last week and 3.14 percent from this time last year, according to the latest weekly survey by Freddie Mac. Rates had already surpassed 7 percent, according to other trackers, but this is the first time that the closely watched Freddie Mac survey surpassed that level in two decades.
“As inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month,” Sam Khater, the chief economist at Freddie Mac, said in a statement. “In fact, many potential home buyers are choosing to wait and see where the housing market will end up, pushing demand and home prices further downward.”
Even though mortgage rates have rocketed higher over a short period, they are still slightly below their long-term average of about 7.8 percent, according to Freddie Mac, which began tracking borrowing costs in 1971. In the early 1980s, rates stretched well into the double digits, exceeding 18 percent in 1981.
economic growth in the third quarter. Existing home sales in September fell nearly 24 percent from the previous year, according to the National Association of Realtors. It was the eighth consecutive month of declines.
The rise in home prices has also begun a swift deceleration. The S&P CoreLogic Case-Shiller National Home Price Index, which tracks single-family home prices, rose 13 percent for the year ending in August, compared with a 15.6 percent increase in July, according to a report released this week. The decline — of 2.6 percentage points — between those two yearlong periods is the steepest drop in the history of the index, which dates to 1987.
“These data show clearly that the growth rate of housing prices peaked in the spring of 2022 and has been declining ever since,” Craig J. Lazzara, a managing director at S&P Dow Jones Indices, said in a statement.
But prices haven’t slowed nearly enough to offset higher borrowing costs. The national median mortgage payment in September rose to $1,941, up 5.5 percent from August, according to a report by the Mortgage Bankers Association, which was also released on Thursday. The median payment has jumped 40 percent, or $558, from the start of the year.
@tarasbernard