Seeing a third-straight week of mortgage rate hikes, the 30-year fixed-rate mortgage (FRM) averaged 6.96% this week, up from last week’s increase to 6.90%, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers
- 30-year fixed-rate mortgage averaged 6.96% as of August 10, 2023, up from last week when it averaged 6.90%. A year ago at this time, the 30-year FRM averaged 5.22%.
- 15-year fixed-rate mortgage averaged 6.34%, up from last week when it averaged 6.25%. A year ago at this time, the 15-year FRM averaged 4.59%.
What the experts are saying
“For the third straight week, mortgage rates continued creeping up and are now just shy of seven percent,” said Sam Khater, Freddie Mac’s chief economist. “There is no doubt continued high rates will prolong affordability challenges longer than expected, particularly with home prices on the rise again. However, upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which historically has kept purchase demand solid.”
Realtor.com Economist Jiayi Xu, commented:
“The Freddie Mac fixed rate for a 30-year mortgage continued to inch towards 7% this week, reaching 6.96%. The Federal Reserve highlighted its reliance on forthcoming data in its July FOMC meeting, and the most recent jobs report offered some mixed signals about the labor market: a smaller number of net new jobs added (187,000) and a dipping unemployment rate (3.5%). While July’s jobs report itself is very unlikely to have a direct impact on the Fed’s upcoming decision, the decline to a 3.5% unemployment rate may imply that more significant slowing is needed to align with the Fed’s projected year-end rate (4.1%). In addition, July’s Consumer Price Index (CPI) was up 3.2% from a year ago, the first acceleration in 13 months. The core inflation rate, excluding volatile food and energy prices, was up 4.7% from a year ago, the lowest since October 2021. Meanwhile, both measures rose 0.2% from the previous month, in line with June’s 0.2% month-over-month increase. Overall, inflation is moving in the right direction, but its level is still well above the 2% target, which means it is very unlikely to see the Fed cut the rate anytime soon.
“While elevated mortgage rates continue to pose a significant challenge to affordability, today’s homeowners are still in a relatively good position as they could leverage near-record high home equity to reduce the size of mortgage loans. What’s more, a recent cross-market report from Realtor.com reveals that home shoppers are also addressing affordability concerns by expanding their search to markets outside of where they live.
“Meanwhile, prices for existing home sales have experienced a consecutive decline over the past four months. Furthermore, listing prices have also shown a decrease this summer, indicating that the possibility of reaching a new peak price in 2023 is unlikely. As home price declines impact housing equity, it is important to consider what falling home prices could mean for the housing market. Thanks to today’s near-record high home equity levels, even in the event of a substantial 10% decline in home values from their level at the end of the fourth quarter, whether occurring suddenly or spread out over two years with a rising mortgage debt (an unlikely scenario), home equity as a share of total real estate value would still be around 60%, offering a significant cushion for existing homeowners in aggregate,” Xu concluded.
