Freddie Mac’s weekly Primary Mortgage Market Survey report released Thursday shows that rates resumed their record-setting climb this week, with the 30-year fixed-rate mortgage reaching its highest level since April of 2002.
“We continue to see a tale of two economies in the data: strong job and wage growth are keeping consumers’ balance sheets positive, while lingering inflation, recession fears and housing affordability are driving housing demand down precipitously,” said Sam Khater, Freddie Mac’s chief economist. “The next several months will undoubtedly be important for the economy and the housing market.”
According to the report:
- 30-year fixed-rate mortgage averaged 6.92% with an average 0.8 point as of Oct. 13, up from last week when it averaged 6.66%. A year ago at this time, the 30-year FRM averaged 3.05%.
- 15-year fixed-rate mortgage averaged 6.09% with an average 1.1 point, up from last week when it averaged 5.9%. A year ago at this time, the 15-year FRM averaged 2.3%.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 5.81% with an average 0.2 point, up from last week when it averaged 5.36%. A year ago at this time, the 5-year ARM averaged 2.55%.
George Ratiu, senior economist for Realtor.com, said investors and lenders are reacting to inflation still running at a hot pace, posing significant concerns for the economy and consumers.
“Both wholesale and consumer prices showed continued upward pressure, outpacing expectations, despite the Federal Reserve’s aggressive inflation-fighting measures,” he said. “This week’s retail sales data may offer a timely insight into how American families are coping with higher prices as the weather begins to cool.”
Ratiu added that housing markets continue to feel the direct impact of higher mortgage rates.
“With incomes lagging behind inflation, homebuyers’ ability to finance a purchase has been slashed by mortgage rates, which surged from 3.1% at the start of 2022 to almost 7%,” he said. “For a family earning the median household income of $71,000 and using a 20% down payment, a typical home purchase budget stretched to $448.700 in January 2022. This week, the same family could only afford a $343,000 home.”
Homebuyers, Ratiu said, are responding to worsening affordability conditions by moving away from expensive cities, seeking lower cost markets around the country.
“Realtor.com’s latest report highlights that the most in-demand housing markets are clustered in the Midwest and more affordable Northeast regions, where the average list price for the 20 hottest markets is $364,000, a 15% discount from the national median.”
The survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20% down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.
