Mortgage rates climbed for the fifth consecutive week Thursday, following recent jobs and inflation reports that surged past forecasts and set expectations that decades-high interest rates could stay higher for longer.
The persistently higher mortgage rates are putting added strain on today’s would-be homebuyers who are also confronting elevated home prices due to a lack of inventory of homes for sale.
The 30-year fixed-rate mortgage averaged 7.57% in the week ending October 12, up from 7.49% the week before, according to data from Freddie Mac. A year ago, the 30-year fixed-rate was 6.92%. The last time rates were this high was in December 2000.
“The good news is that the economy and incomes continue to grow at a solid pace,” said Sam Khater, Freddie Mac’s Chief Economist. “But the housing market remains fraught with significant affordability constraints. As a result, purchase demand remains at a three-decade low.”
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.
Mortgage rates have spiked during the Federal Reserve’s historic inflation-curbing campaign — and while a good deal of progress has been made, it is not yet as low as the Fed would like.
The Fed’s preferred inflation measure, the core Personal Consumption Expenditures index, is currently 3.9%, which is nearly double the Fed’s target of 2%. But it is the lowest annual increase that index has seen in two years and is a positive step toward the Fed’s target.
This is a developing story and will be updated.
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