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  • Mortgage rates reach highest level since 2001 and are likely to go higher, Freddie Mac says

    Mortgage rates reach highest level since 2001 and are likely to go higher, Freddie Mac says

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    U.S. mortgage rates increased for the fifth week in a row, with the 30-year reaching the highest level since 2001. 

    The 30-year fixed-rate mortgage averaged 7.23% as of Aug 24, according to data released by Freddie Mac
    FMCC,
    +0.18%
    on Thursday. 

    It’s up 14 basis points from the previous week — one basis point is equal to one hundredth of a percentage point. 

    The last time rates were this high was in June 2001. 

    A year ago, the 30-year was averaging at 5.55%.

    The average rate on the 15-year mortgage rose to 6.55% from 6.46% last week. The 15-year was at 4.85% a year ago.

    Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage. 

    Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging at 7.36% as of Thursday afternoon.

    What Freddie Mac said: “Indications of ongoing economic strength will likely continue to keep upward pressure on rates in the short-term,” Sam Khater, chief economist at Freddie Mac, said in a statement. 

    “As rates remain high and supply of unsold homes woefully low, incoming data shows that existing homes sales continue to fall,” he added. “However, there are slightly more new homes available, and sales of these new homes continue to rise, helping provide modest relief to the unyielding housing inventory predicament.

    What are they saying? Other industry experts also believe rates could move higher.

    “Earlier this year, it looked as though inflation was being brought under control and the Fed may be almost ready to declare victory… now, however, as inflation has ticked up and bond yields are rising amidst economic uncertainty, it is a different situation,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement. “Instead of talking about rates falling to 6% this year, the question is how much above 7% are we going to go?”

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  • Home buyers flee the housing market as mortgage rates surge to the highest level since 2000

    Home buyers flee the housing market as mortgage rates surge to the highest level since 2000

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    The numbers: Mortgage rates rose for the fourth week in a row to the highest level since 2000, as the economy continues to show strength.

    Rates surged as the U.S. economy continued to show signs of resilience,  which signal to the market that the U.S. Federal Reserve may not be done with rate increases.

    The 30-year was averaging at 7.31%, which in part dampened demand for home-purchase mortgages to the lowest level since April 1995. 

    Demand for both purchases and refinancing fell. That overall pushed down the market composite index, a measure of mortgage application volume, the Mortgage Bankers Association (M.B.A.) said on Wednesday. 

    The market index fell 4.2% to 184.8 for the week that ended Aug. 18, relative to a week earlier. A year ago, the index stood at 270.1.

    Key details: High mortgage rates are weighing on home buyers’ budgets due to an increase in borrowing costs. Many buyers fled the market as a result of rates rising over the last week. The purchase index, which measures mortgage applications for the purchase of a home, fell 5% from last week.

    Rates hold little allure for homeowners hoping to refinance. The refinance index fell 2.8%.

    Rates rose across the board.

    The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 7.31% for the week ending August 18. That’s up from 7.16% the week before, the M.B.A. said. The 30-year is at the highest level since December 2000.

    The rate for jumbo loans, or the 30-year mortgage for homes sold for over $726,200, was 7.27%, up from 7.11% the previous week.

    The average rate for a 30-year mortgage backed by the Federal Housing Administration rose to 7.09% from 6.93%.

    The 15-year rose to 6.72%, up from last week’s 6.57%. 

    The rate for adjustable-rate mortgages rose to 6.5% from last week’s 6.2%. The share of adjustable-rate mortgages rose to 7.6%, the highest level in five months.

    The big picture: The housing market continues to be hammered by good economic news, which is pushing rates up and depressing home sales. Higher rates also discourage homeowners from selling, as their purchasing power erodes when they look for homes to buy. 

    As a result, both home-buying demand and supply of home listings continues to fall, bringing the market to a standstill. Until the economy shows signs of slowing, it’s likely that the housing market will remain in the doldrums.

    What the M.B.A. said:  “Applications for home purchase mortgages dropped to their lowest level since April 1995, as home buyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power,” Joel Kan, deputy chief economist and vice president at the M.B.A., said in a statement.

    Kan added that there was an uptick in people using adjustable-rate mortgages. “Some home buyers are looking to lower their monthly payments by accepting some interest rate risk after the initial fixed period,” he said.

    Market reaction: The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    was above 4.3% in early morning trading Wednesday.

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