Mortgage Rates at Record Not Seen Since Spring 2011
The average 30-year, fixed mortgage rate rocketed to 4.72 percent this week, at a record not seen since spring 2011, according to Freddie Mac's latest Primary Mortgage Market Survey® (PMMS®). The average 15-year, fixed mortgage rate rose to 4.16 percent, while the average five-year, Treasury-indexed hybrid adjustable mortgage rate shot to 3.97 percent. Last week, the rates were 4.65 percent, 4.16 percent and 3.92 percent, respectively.
The cause of the jump? According to the Case-Shiller Indices, also released this week, home prices are slowing, with growth in July at 6 percent—earlier this spring, the pace was 6.5 percent. Additionally, the Federal Reserve opted to raise rates this week, with borrowing costs increasing, as a result.
"The robust economy, rising Treasury yields and the anticipation of more short-term rate hikes caused mortgage rates to move up," says Sam Khater, chief economist at Freddie Mac. "Even with these higher borrowing costs, it's encouraging to see that prospective buyers appear to be having a little more success. With inventory constraints and home prices starting to ease, purchase applications have now trended higher on an annual basis for six straight weeks."
Still, Khater says, demand will linger.
"Consumer confidence is at an 18-year high, and job gains are holding steady," says Khater "These two factors should keep demand up in coming months—but at the same time, home shoppers will likely deal with even higher mortgage rates."
Source: Freddie Mac