Mortgage rates continued toward the 7% mark this week, but slowing it’s upward trajectory with just a slight rise from the previous week.
The 30-year fixed-rate mortgage (FRM) averaged 6.94%, up from 6.92% the previous week, according to the latest Primary Mortgage Market Survey® (PMMS®) released by Freddie Mac today.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.94% with an average 0.9 point as of October 20, 2022, up from last week when it averaged 6.92%. A year ago at this time, the 30-year FRM averaged 3.09%.
- 15-year fixed-rate mortgage averaged 6.23% with an average 1.1 point, up from last week when it averaged 6.09%. A year ago at this time, the 15-year FRM averaged 2.33%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 5.71% with an average 0.4 point, down from last week when it averaged 5.81%. A year ago at this time, the 5-year ARM averaged 2.54%.
What the experts think:
“Mortgage rates slowed their upward trajectory this week,” said Sam Khater, Freddie Mac’s chief economist. “The 30-year fixed-rate mortgage continues to remain just shy of seven percent and is adversely impacting the housing market in the form of declining demand. Additionally, homebuilder confidence has dropped to half what it was just six months ago and construction, particularly single-family residential construction, continues to slow down.”
Dr. Lisa Sturtevant, Bright MLS chief economist, commented:
“At the beginning of the year, it seemed very unlikely that mortgage rates would push past 6%. Now, as rates 7%, the question is how high will they go? A lot of the answer depends on how aggressive the Federal Reserve is going to go on rate hikes in its next two meetings.
“Rates have been steadily increasing throughout the year, with some volatility resulting from a range of other economic factors impacting the market. But the impacts of the Federal Reserve’s actions are crystal clear—the Fed will continue to raise rates in an attempt to tamp down inflation even if it causes pain in the short term.
“High prices and high mortgage rates have combined to make purchasing a home very difficult, particularly for first-time homebuyers who do not have equity to roll into a new home purchase. Last year, a homebuyer looking to spend about $1,500 for a monthly home payment could afford a $380,000 home. Now, with mortgage rates more than double what they were a year ago, that home price has dropped to $250,000 to remain at the same monthly payment., and in many areas of the country homes in this price range don’t exist.
“Repeat buyers who are able to roll equity over into a home purchase are in better shape, but higher rates are putting the brakes on “discretionary” moves. While there will continue to be buyers in the market who have to move for a job or family reasons, buyers who were considering a move that is not necessary are hitting pause on their search. According to data for the Mid-Atlantic market, the number of showings has declined dramatically during the first part of October, with buyer traffic lower than it was in 2019,” Sturtevant concluded.
Realtor.com® Economic Data Analyst Hannah Jones, said:
“The Freddie Mac fixed rate for a 30-year loan continued to climb this week, reaching 6.94% as the 10-year treasury hovered near 4%. Inflation is top of mind as the September CPI data showed still-climbing prices sticking stubbornly at 8.2% higher than last year, despite the Fed’s efforts to get them under control. With their next meeting two weeks away, the Fed will continue to take decisive action to bring prices back down to a healthy level.
“Buyers, builders and sellers alike have taken a step back to consider their best course of action given heightened mortgage rates and persistent inflation. Home purchase sentiment hit its lowest level since 2011 and home builder sentiment fell for the 10th month in a row in September as construction activity slowed. Sellers are responding to the shift in the market and pulling back on listing activity, resulting in a 9.8% decrease in new listings compared to last year.
“Despite shifts in buyer demand, the median U.S. listing price was $427,000 in September, up 13.9% compared to last year. At this price, with today’s mortgage rate and a 20% down payment, the typical U.S. mortgage payment would be $2,260. This payment is roughly $200 more than the typical monthly mortgage payment was in June of this year, when home prices peaked at $450,000 and mortgage rates were around 5.5%. Though price growth has cooled and prices have begun to come down, high and still climbing mortgage rates mean many of today’s buyers face larger home payments than they would have when home prices were at their peak. However, demand has remained strong in affordable markets such as those on September’s Hottest Markets list. Buyers who are able to be flexible may be able to find a deal this fall by zeroing in on affordable areas or by taking advantage of the market conditions and leveraging some bargaining power as homes sit on the market longer,” Jones concluded.
