Mortgage rates climbed this week after briefly easing last week, rising to their highest level since 2002, according to Freddie Mac’s latest Primary Mortgage Market Survey® (PMMS®). The 30-year fixed-rate mortgage (FRM) averaged a record-setting 6.92% this week, the survey said, up from a brief downturn to 6.66% last week and 6.70% the week before.
This week’s survey findings:
- 30-year fixed-rate mortgage averaged 6.92% with an average 0.8 point as of October 13, 2022, up from last week when it averaged 6.66%. A year ago at this time, the 30-year FRM averaged 3.05%.
- 15-year fixed-rate mortgage averaged 6.09% with an average 1.1 point, up from last week when it averaged 5.90%. A year ago at this time, the 15-year FRM averaged 2.30%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 5.81% with an average 0.2 point, up from last week when it averaged 5.36%. A year ago at this time, the 5-year ARM averaged 2.55%.
What the experts are saying:
“Rates resumed their record-setting climb this week, with the 30-year fixed-rate mortgage reaching its highest level since April of 2002,” said Sam Khater, Freddie Mac’s chief economist. “We continue to see a tale of two economies in the data: strong job and wage growth are keeping consumers’ balance sheets positive, while lingering inflation, recession fears and housing affordability are driving housing demand down precipitously. The next several months will undoubtedly be important for the economy and the housing market.”
George Ratiu, senior economist for Realtor.com®, commented:
“The Freddie Mac fixed rate for a 30-year loan regained its upward momentum this week, surging to 6.92%, in the wake of the 10-year Treasury’s return near 4%. Investors and lenders are reacting to inflation still running at a hot pace, posing significant concerns for the economy and consumers. Both wholesale and consumer prices showed continued upward pressure, outpacing expectations, despite the Federal Reserve’s aggressive inflation-fighting measures. This week’s retail sales data may offer a timely insight into how American families are coping with higher prices as the weather begins to cool.
“Housing markets continue to feel the direct impact of higher mortgage rates. With incomes lagging behind inflation, homebuyers’ ability to finance a purchase has been slashed by mortgage rates which surged from 3.1% at the start of 2022 to almost 7%. For a family earning the median household income of $71,000 and using a 20% down payment, a typical home purchase budget stretched to $448.700 in January 2022. This week, the same family could only afford a $339,200 home.
“Homebuyers are responding to worsening affordability conditions by moving away from expensive cities, seeking lower cost markets around the country. Realtor.com’s latest report highlights that the most in-demand housing markets are clustered in the Midwest and more affordable Northeast regions, where the average list price for the 20 hottest markets is $364,000, a 15% discount from the national median,” Ratiu concluded.