Rates increase again, a sign that inflation continues to take a toll on the housing market.
US long-term mortgage rates rose further this week, hitting their highest level since the housing market crash of 2008 that started the Great Recession.
Freddie Mac reported Thursday that the 30-year fixed-rate mortgage jumped to 5.89%, up 23 basis points from last week and the highest since November 2008.
“Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy due to elevated inflation,” said Freddie Mac chief economist Sam Khater.
The 15-year rate climbed 18 basis points week over week to a 5.16% average. A year ago at this time, the 15-year fixed-rate mortgage was 2.19%. The five-year Treasury-indexed hybrid adjustable-rate mortgage increased from 4.51% to 4.64%.
Andy Walden, vice president of enterprise research at Black Knight, pointed out the implications of the rate increases for both affordability and (what's left of) refinance incentive.
“With 30-year rates at 5.89%, home affordability levels have fallen to a new 35-year low,” Walden said. “Given the large role affordability challenges appear to be playing in shifting housing market dynamics, the recent pullback in home prices is likely to continue.”
Khater disagrees, citing recent studies that show a bright side to the higher-rate environment.
“Not only are mortgage rates rising, but the dispersion of rates has increased, suggesting that borrowers can meaningfully benefit from shopping around for a better rate,” he said. “Our research indicates that borrowers could save an average of $1,500 over the life of a loan by getting one additional rate quote and an average of about $3,000 if they get five quotes.”