U.S. mortgage rates jumped to their highest level in more than two decades.
The average 30-year fixed mortgage rate hit 6.92% this week, according to a survey of lenders released Thursday by mortgage giant
Many lenders are offering rates well over 7%. A year ago, the average rate was 3.05%.
The most recent jump, from 6.66% a week ago, took the rate above the peak of the last financial crisis. The benchmark has climbed nearly 2 percentage points since August, adding to an already brisk rise since the Federal Reserve began lifting rates earlier this year.
The latest climb has been particularly painful for the housing market, putting homeownership out of reach for many would-be buyers because of the added monthly cost of paying a mortgage at a higher rate.
A buyer that earns the median household income and puts 20% down could afford a home costing $343,000 this week. That buyer could have afforded a home costing almost $449,000 in January, according to listings website Realtor.com, which is operated by Wall Street Journal parent company
The median existing home cost $389,500 in August.
The higher rates have further cooled the housing and mortgage markets. The volume of mortgage rate locks is down 30% over the past three months and almost 60% from last year’s levels, according to
Black Knight Inc.,
a mortgage technology and data provider. In particular, rate locks for people refinancing to pull cash out of their homes are down more than 26% between August and September.
“The phones are just not ringing,” said
president at Sanborn Mortgage Corp. “It’s really, really quiet.”
Mortgage rates tend to rise and fall with the yield on the 10-year Treasury note, which was recently trading around 4%. The cost of borrowing has risen across the board since the central bank embarked on its aggressive campaign to curb inflation.
“We continue to see a tale of two economies in the data: strong job and wage growth are keeping consumers’ balance sheets positive, while lingering inflation, recession fears and housing affordability are driving housing demand down precipitously,”
Freddie Mac’s chief economist, said in a statement.
Write to Ben Eisen at [email protected]
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