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Thursday, August 11, 2022

Average national 30-year mortgage rate hits 5.54%

WASHINGTON ( Associated Press) – Average long-term US mortgage rates rallied again this week in a sharply cooling housing market as the Federal Reserve prepares for another bump to its benchmark interest rate.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate rose to 5.54% from 5.51% last week. A year ago the 30-year average rate was 2.78%.

watch: Skyrocketing house prices and rents create housing crisis

Popular among those refinancing their homes, the average rate on a 15-year, fixed-rate mortgage rose to 4.75% from 4.67% last week. At this time last year, the rate was 2.12%.

Most economists expect the Federal Reserve to raise its lending rate by one-half to three-quarters of a point when it meets next week. Fed policymakers have indicated that much higher interest rates are needed to reign in stubborn, four decades of high inflation. The central bank already raised its benchmark rate by half a point in May and another three-quarters of a point last month, the biggest single increase since 1994.

A rapid rate hike risks pushing the US economy into recession, but it is also the Fed’s most powerful tool to roll back price increases to its 2% annual target.

The Labor Department reported last week that its consumer price index rose 9.1% over the previous year, the biggest annual increase since 1981. The producer price index of labor – which measures inflation before it reaches consumers – rose 11.3% in June from a year earlier. ,

High lending rates have sidelined many home hunters and cooled a red-hot housing market, one of the most important sectors of the economy. The National Association of Realtors said Wednesday that sales of previously authorized US homes slowed for the fifth straight month in June.

Home prices continued to climb in June – albeit at a slower pace than at the beginning of this year – even though sales remained slow. The national median home price rose 13.4% to $416,000 in June from a year earlier. The NAR said it was the highest ever level as of 1999 data.

Read more: Why US inflation is accelerating, and when it might ease

“Consumer concerns about rising rates, inflation and a potential recession are manifesting in softer demand,” said Sam Khatter, chief economist at Freddie Mac. “As a result of these factors, we expect home price increases to be significantly reduced.”

The Mortgage Bankers Association said on Wednesday that mortgage applications declined 19% compared to last year and refinances fell 80% to a 22-year low.

Layoffs have started in the housing and lending sector. Among those reporting job cuts in recent months are online mortgage company Lending Depot, online real estate broker Redfin and Compass.

The nation’s largest bank by assets, JPMorgan Chase, is laying off hundreds from its mortgage arm and hiring hundreds of others elsewhere at the firm.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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