Economic Strength Pushes Mortgage Rates Upward

The 30-year fixed rate mortgage averaged 6.96% this week, according to Freddie Mac. This marks the third consecutive week of increases.

“For the third straight week, mortgage rates continued creeping up and are now just shy of 7%. There is no doubt continued high rates will prolong affordability challenges longer than expected, particularly with home prices on the rise again. However, upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which historically has kept purchase demand solid,” Sam Khater, Freddie Mac’s chief economist, said.

Key Facts from the Survey

• 30-year fixed-rate mortgage: Averaged 6.96% as of August 10, 2023, up from last week when it averaged 6.90%. This time last year, the 30-year FRM averaged 5.22%.
• 15-year fixed-rate mortgage: Averaged 6.34%, an increase from last week's average of 6.25%. A year ago, the 15-year FRM averaged 4.59%.

The survey is centered on conventional, conforming, fully amortizing home purchase loans for borrowers who make a down payment of 20% and have excellent credit.

The recent rise in mortgage rates comes amid a strengthening economy and rising home prices. While higher rates may present challenges for potential homebuyers, especially those looking to enter the market for the first time, the overall economic indicators point to a robust housing market.

Experts are closely monitoring these trends, recognizing the delicate balance between rising rates and the overall affordability of homes. The increase in rates may have a cooling effect on some markets, potentially easing demand and slowing price growth. However, the strong wage growth and low unemployment figures suggest that demand is likely to remain steady.