(Bloomberg) -- Mortgage rates in the US surged to the highest since June, turning up the pressure in a housing market where demand has fallen sharply from its pandemic-era peak.
The average for a 30-year loan rose to 5.55% from 5.13% last week, Freddie Mac (OTC:FMCC) said in a statement Thursday. Aside from a week in mid-June when the rate increased by 55 basis points, the latest surge is the steepest since 2013.
Rates tracked a jump in yields for 10-year Treasuries, which this week topped 3% for the first time in a month. Investors are bracing for the next move by the Federal Reserve, which has been raising its benchmark interest rate in an effort to tame the hottest inflation in decades.
High home prices and this year’s run-up in mortgage costs have pushed out many would-be buyers, chilling transactions in a swift turnaround that has sent shock waves throughout the real estate industry.
Home sellers are cutting their asking prices, and brokerages are laying off staff. Builders are slowing construction starts while stepping up incentives to lure customers as inventory piles up. With mortgage applications stuck at a 22-year low, some non-bank lenders are struggling to stay in business.
“The combination of higher mortgage rates and the slowdown in economic growth is weighing on the housing market,” Sam Khater, Freddie Mac’s chief economist, said in the statement. “Home sales continue to decline, prices are moderating and consumer confidence is low. But, amid waning demand, there are still potential homebuyers on the sidelines waiting to jump back into the market.”
At the current 30-year average, a borrower with a $300,000 mortgage would pay $1,713 a month, about $430 more than at the end of last year.
Freddie Mac’s loan data is collected from Monday through Wednesday. On Mortgage News Daily, which updates the figure more frequently, 30-year rates averaged 5.84% late Wednesday.
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