Average long-term U.S. mortgage rates had their biggest one-week jump in 35 years with the Federal Reserve this week raising its key rate by three-quarters of a point in bid to tame high inflation.
Mortgage buyer Freddie Mac reported Thursday that the 30-year rate climbed from 5.23% last week to 5.78% this week, the highest its been since November of 2008 during the housing crisis.
Wednesday’s rate hike by the Fed was its biggest in a single action since 1994.
The brisk jump in rates, along with a sharp increase in home prices, has been pushing potential homebuyers out of the market. Mortgage applications are down more than 15% from last year and refinancings are down more than 70%, according to the Mortgage Bankers Association.
Those figures are likely to worsen with more Fed rate increases a near certainty.
The Fed’s unusually large rate hike came after data released last week showed U.S. inflation rose last month to a four-decade high of 8.6 %. The Fed’s benchmark short-term rate, which affects many consumer and business loans, will now be pegged to a range of 1.5% to 1.75%—and Fed policymakers forecast a doubling of that range by year’s end.
Higher borrowing rates appear to be slowing the housing market, a crucial part of the economy. Sales of previously occupied U.S. homes slowed for the third consecutive month in April as mortgage rates surged, driving up borrowing costs for would-be buyers as home prices soared.
On Tuesday, the online real estate broker Redfin, under pressure from the cooling housing market, said Tuesday that it was laying off 8% of its workers.
Homeownership has become increasingly difficult lately, especially for first-time buyers. Besides staggering inflation, rising mortgage rates and soaring home prices, the supply of homes for sale continues to be scarce.
The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, rose to 4.81% from 4.38% last week. A year ago, the rate was 2.24%.
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The JB miracle continues…
+1
Gee whiz, didn’t “someone” predict this very scenario. But at least we don’t have those “terrible” tweets.
I hope everyone that voted for these economically ignorant morons (sorry but its difficult to put it any other way) is satisfied.
How many times do we have to repeat this mistake before people realize that when “these people (lets call them progressives) get in control, they DESTROY the economy and make us ALL suffer.
As long as they keep promising the freebies they will continue to vote for them and the working class have to pay.
You talking about trump or Biden here?
Because trumps administration created the most fraudulent program of corporate socialism to ever exist… people should be jailed for the PPP program, it’s the cause of our impending recession. We printed billions and it disappeared into the pockets of business owners and had yet to make it into the economy.
You mean the over-hot housing market that was exacerbated under Trump when his Fed pick decided to bring rates down to historic lows? The recession that Bush threw us into? The union-busting and destruction of the middle class by Reagan? Those shining examples of economic brilliance?