The steady climb of U.S. mortgage rates has continued for the seventh consecutive week, marking the longest streak of increases since last spring. According to data released by Freddie Mac on Thursday, the 30-year fixed-rate mortgage now stands at 7.79% as of October 26, representing a 16 basis point increase from the previous week. These rates are currently at their highest level since November 2000, with a significant jump compared to last year's average of 7.08%.
Rates Across Different Mortgage Types
In addition to the 30-year fixed-rate mortgage, the average rate on the 15-year mortgage has also risen. It now stands at 7.03%, up from 6.92% the previous week. The 15-year mortgage was at 6.36% at this time last year.
Insights from Freddie Mac
Freddie Mac's chief economist, Sam Khater, expressed concern over the rising rates, stating, "Rates have risen two full percentage points in 2023 alone and, as we head into Halloween, the impacts may scare potential homebuyers." He emphasized that the current high rates are affecting purchase activity, with affordability remaining a significant hurdle for many buyers. Khater believes that the key to addressing this situation lies in lower rates and increased inventory.
Analysis from Market Experts
Lisa Sturtevant, chief economist at Bright MLS, highlighted the financial strain caused by the rising rates: "In March 2022, the typical monthly payment was about $2,000, and home buyers needed an income of about $89,000 to qualify for a loan. Now ... the typical monthly payment is $3,100, and a homebuyer would have to earn more than $130,000 to qualify." She noted that for some prospective buyers, these numbers simply do not make sense with rates nearing 8%. Sturtevant predicts that mortgage rates are likely to remain in the 6% range throughout next year, further exacerbating the issue of tight supply and propping up home prices.
Behind the Numbers
It is worth noting that Freddie Mac's weekly report on mortgage rates is based on thousands of mortgage applications received from lenders across the country. These applications are submitted to Freddie Mac by borrowers when they apply for a mortgage. Furthermore, separate data from Mortgage News Daily stated that the 30-year fixed-rate mortgage was averaging 7.98% as of Thursday afternoon.