Mortgage rates have increased for the fifth consecutive week, raising concerns about potential interest rate hikes by the U.S. Federal Reserve and the ongoing conflict in Israel and Gaza.
According to data released on Thursday by Freddie Mac, the 30-year fixed-rate mortgage is now averaging 7.57% as of October 12th. This represents an 8 basis point rise compared to the previous week, bringing mortgage rates to their highest level since December 2000. In comparison, a year ago, the 30-year rate was averaging 6.92%.
Similarly, the average rate on a 15-year mortgage has risen to 6.89% from 6.78% in the previous week. This marks a substantial increase from the 6.09% recorded this time last year.
Freddie Mac's weekly report on mortgage rates is based on thousands of applications received from lenders nationwide when borrowers apply for mortgages.
Additional data from Mortgage News Daily reveals that the 30-year fixed-rate mortgage is averaging 7.6% as of Thursday afternoon.
Freddie Mac's Insights:
Commenting on the rising rates, Sam Khater, the chief economist at Freddie Mac, stated, "Mortgage rates rose as ongoing market and geopolitical uncertainty continues to increase." He further added, "Despite steady economic growth and increasing incomes, the housing market is still struggling with significant affordability issues. Consequently, we are witnessing historically low demand for home purchases."
Economists predict that rates are entering a new cycle and will eventually settle at a higher level than in recent years. Lisa Sturtevant, chief economist at Bright MLS, explains, "Since the financial collapse in 2008, the average rate on a 30-year fixed-rate mortgage has been below 5%. However, it is reasonable to expect that we will return to the more typical range of 6% when market conditions stabilize."
In summary, mortgage rates are on the rise due to ongoing market uncertainties. While economic growth remains steady, the real estate market faces significant challenges in terms of affordability, leading to a decline in home purchase demand. Experts suggest that rates will settle at a higher level than in previous years once the market stabilizes.
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