Mortgage rates have risen at the fastest pace since 1987 as inflation accelerated again and the Federal Reserve raised benchmark rates again in an attempt to contain it.
According to Freddie Mac’s Primary, interest rates on 30-year fixed-rate mortgages averaged 5.78 percent as of June 16. Mortgage Survey, Increased from 5.23% last week. This is the largest weekly increase in the three and a half year survey. Mortgage rates have risen by more than 2.5 percentage points since the beginning of the year, but this week’s average interest rate in 2021 was 2.93 percent.
The Federal Reserve raised its benchmark interest rate on Wednesday by three-quarters percentage points after a slight rise in March and May. 30-year fixed mortgage rates are not tied to the FRB’s benchmark interest rates, but instead yield 10-year government bond yields that are affected by a variety of factors, including inflation expectations, FRB behavior, and investor behavior. Track. It reacts to all of it.
“These high interest rates are the result of changing expectations of inflation and the direction of monetary policy,” Freddie Mac chief economist Sam Carter said in a statement. “Higher mortgage rates will ease the blazing pace of housing activity that has experienced a pandemic break, ultimately leading to a more balanced housing market.”
Rising mortgage rates, coupled with soaring home prices, have eroded what future homebuyers can afford and are increasingly pushing them out of the market altogether. There are already signs that the market is chilling.
Mortgage purchase applications increased by 6.6% in the week from the previous week to June 10, but applications decreased by more than 15% compared to the same period last year.Mortgage Bankers Association Said on wednesday..
“Continuous inventory shortages and affordable challenges have cooled demand and are in line with the surge in mortgage rates,” said Joel Kang, vice president of economic and industrial forecasting for the group.
