The increase comes at a particularly challenging time for the housing market.
The 30-year fixed mortgage rate jumped by 11 basis points from last week, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey showed that the long-term fixed-rate mortgage rose from 5.55% to 5.66% week over week. The 15-year fixed-rate mortgage increased 13 basis points to 4.98%, and the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) increased 15 basis points to 4.51%.
Chief economist Sam Khater pointed to the market’s “renewed perception of a more aggressive monetary policy stance” as another reason why mortgage rates are almost double than they were a year ago. Compared to this time last year, the average 30-year loan was 2.87%.
“The increase in mortgage rates is coming at a particularly vulnerable time for the housing market as sellers are recalibrating their pricing due to lower purchase demand, likely resulting in continued price growth deceleration,” Khater said.
Steve Reich, chief operations officer of Finance of America Mortgage, commented: “Home-price appreciation continues to become more gradual as the Fed has worked to manage inflation and raised mortgage interest rates.
Data shows there was a significant boost in inventory in June — active listings increased by about 18% compared to the same period last year. This spike can likely be attributed to the fact that more sellers put their homes on the market during the popular summer homebuying season, which may have reduced competition in certain markets.
“While mortgage rates were higher compared to this time last year and the 30-year fixed mortgage is hovering above 5%, rates are comparable to pre-pandemic levels. For that reason, I believe that prospective homebuyers should look at the glass as half full as they continue or begin their home search. More inventory and slowing demand may provide some wiggle room, and savvy buyers may be able to take advantage of this opportunity.”