Uptick spurred by increase in consumer spending as US economy bounces back.
Freddie Mac’s latest survey has shown that the 30-year fixed-rate mortgage increased for the second week in a row, now averaging 6.32%.
This marks a 20-basis point jump from 6.12% last week and above the 3.92% average a year ago at this time. The 15-year fixed mortgage rate climbed to 5.51% from 5.25% the previous week. A year ago, it was 3.15%.
“Mortgage rates moved up for the second consecutive week,” said Sam Khater, Freddie Mac’s chief economist. “The economy is showing signs of resilience, mainly due to consumer spending, and rates are increasing. Overall housing costs are also increasing and therefore impacting inflation, which continues to persist.”
Consequentially, home loan applications fell 7.7% week over week, according to the Mortgage Bankers Association. Refinance applications were down 13%, and purchase activity declined 5% compared to the prior week.
“Mortgage rates increased across the board last week, pushed higher by market expectations that inflation will persist, thus requiring the Federal Reserve to keep monetary policy restrictive for a longer time,” said MBA deputy chief economist Joel Kan. “Mortgage applications decreased for the second time in three weeks because of these higher rates. Refinance borrowers, both rate/term and cash-out, remain on the sidelines as current rates provide little financial incentive to act.”