US mortgage rates climbed even higher this week, hitting 7.49% and pushing homeownership further out of reach for would-be homebuyers.
That’s up from 7.31% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 6.66%.
“Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation,” said Sam Khater, Freddie Mac’s chief economist. “Unsurprisingly, this is pulling back homebuyer demand.”
Mortgage rates have spiked during the Federal Reserve’s historic inflation-curbing campaign. The central bank has indicated it may keep rates higher for longer, due to stubborn inflation. That has pushed up the 10-year Treasury yield, a key benchmark for mortgage rates.
The added cost of financing a mortgage, along with rising home prices due to historically low inventory of homes for sale, has sent home affordability to its lowest level in several decades. The result is a home sales pace that is more than 20% behind last year at this point in the year, according to the National Association of Realtors.
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.
This story is developing and will be updated.
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