US mortgage rates drop after five weeks of climbing, but stay over 7%

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US mortgage rates ticked down this week, ending a five-week stretch of increases. However, they remained above 7% amid lingering inflation.

The 30-year fixed-rate mortgage averaged 7.18% in the week ending August 31, down from 7.23% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.66%.

“Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes,” said Sam Khater, Freddie Mac’s chief economist.

Mortgage rates have spiked during the Fed’s historic inflation-curbing campaign, sending home affordability to its lowest level in nearly four decades. Buying a home is more expensive because of the added cost of financing the mortgage and rising home prices.

Home prices have been climbing because there are a historically low number of homes on the market to buy. Homeowners who previously locked in lower rates are reluctant to sell now that rates have surged.

The combination of low inventory and high costs has squeezed would-be homebuyers and sent home sales lower than last year.

This is a developing story and will be updated.

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