The average mortgage rate on a popular home loan was at its highest point since 2008 this week, according to data released by Freddie Mac on Thursday.
The climb above June’s 2022 high comes as investors expect tighter monetary policy in response to inflation.
The average 30-year fixed mortgage rate was 5.89% as of Sept. 8, according to Freddie Mac’s weekly Primary Mortgage Market Survey. The rate, which surpassed 2022’s previous survey high by 0.08 percentage points, was the highest since November 2008, according to historic data.
“Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy due to elevated inflation,” Sam Khater, Freddie Mac’s chief economist, said in a statement. The 10-year Treasury yield, with which mortgage rates often move in tandem, gained with other bonds earlier this week as investors reacted to a strong jobs report.
Rising rates, combined with high home prices, have put pressure on would-be home buyers. Data released earlier this week by the Mortgage Bankers Association showed that seasonally-adjusted purchase loan applications had declined for the fifth week in a row last week amid rising rates.
The slowdown in the housing market has weighed on sentiment. Results of an August Fannie Mae survey released Wednesday showed that nearly three-fourths of respondents said it was a bad time to buy, a slight improvement from the month prior, but still well above the data set’s historic average of 34%. The share of sellers who said it was a bad time to sell, meanwhile, increased eight points to 35% from 27% the month prior.
“With home prices expected to moderate over the forecast horizon and economic uncertainty heightened, both home buyers and home sellers may be incentivized to remain on the sidelines,” said Doug Duncan, Fannie Mae’s chief economist, in a statement. Buyers, he said, may choose to postpone their search in anticipation of price drops, while would-be sellers may opt to stay in place, having secured a lower mortgage rate.
While rising mortgage rates have added to the cost of a loan, Freddie Mac’s Khater said buyers could benefit from requesting quotes from multiple lenders. “Our research indicates that borrowers could save an average of $1,500 over the life of a loan by getting one additional rate quote and an average of about $3,000 if they get five quotes,” he said.
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