Mortgage rates surged to 5.27% over the last week, the highest average since 2009, according to the latest Freddie Mac PMMS.
This week’s average purchase mortgage rate rose 17 basis points from the prior week’s 5.10%. A year ago at this time, 30-year fixed-rate purchase rates were at 2.96%. The government sponsored enterprise’s index accounts for purchase mortgages reported by lenders over the past three days.
According to Sam Khater, Freddie Mac’s chief economist, while mortgage rates are rising, house price appreciation will decline later in the year.
“Mortgage rates resumed their climb this week as the 30-year fixed reached its highest point since 2009,” Khater said in a statement. “While housing affordability and inflationary pressure pose challenges for potential buyers, house price growth will continue but it is expected to decelerate in the coming months.”
This week, mortgage application volume rose 2.5% from the previous week. Refi applications dropped to 33.9% and the adjustable-rate mortgage share remained unchanged at 9.3% of total applications, according to the Mortgage Bankers Association. The MBA found that purchase applications increased for conventional, FHA, and VA loans — all up 4% this week from the previous week.
Mortgage rates are following the Federal Reserve’s inflation-fighting monetary policy. The central bank raised the interest rate by a half percentage point on Wednesday to reduce the $9 trillion asset portfolio that ballooned since the pandemic. The central bank had signaled it would raise rates six times this year with several more planned in 2023.
“Once we are past this rate spike and associated volatility, MBA expects that potential homebuyers may be more willing to re-enter the market. Given how much higher rates will remain above the past two years, we do not expect refinance demand to increase any time soon,” said Mike Fratantoni, chief economist at MBA.
Another index shows rates above 5.5%. Black Knight’s Optimal Blue OBMMI pricing engine, which considers refinancings and additional data from the MBA, measured the 30-year conforming mortgage rate at 5.525% on Wednesday, up from 5.317% the previous Wednesday. The 30-year fixed-rate jumbo rose to 5.042% on Wednesday from 4.841% in the previous week.
According to Freddie Mac, the 15-year fixed-rate purchase mortgage averaged 4.52%, with an average of 0.8 point from 4.40% the week prior. The 15-year fixed-rate mortgage averaged 2.30% last year. The 5-year adjustable-rate mortgage averaged 3.96%, with buyers on average paying for 0.2 point, up from last week’s 3.78%. The product averaged 2.70% a year ago.