iStock illustration

The average rate on a 30-year, fixed-rate mortgage has increased to the highest level since late June, according to Freddie Mac.

The rate now sits at 5.55 percent, the highest it’s been since June 30, when it dropped to 5.7 percent.

This time last week, Freddie Mac’s survey of mortgage rates reported the average rate on a 30-year, fixed-rate loan was 5.13 percent.

“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 a 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.”

The increase comes as buyers get ready to enter the fall housing market, and if sustained, could keep up the pressure on affordability that’s caused many to pause their home searches or end them entirely.

“While rates are nearly three percentage points higher than a year ago, buyers need to spend about $720 more monthly for the median-priced home,” Nadia Evangelou, National Association of Realtors senior economist, said in a statement released by the association. “Apart from rising mortgage rates, [national] home prices continue to show double-digit year-over-year gains. The median-priced home is worth about $40,000 more than a year earlier. While both home prices and mortgage rates increase the borrowing cost for prospective buyers, the impact of higher mortgage rates is three times larger on the monthly mortgage payment. Specifically, within the last 12 months, all else equal, the monthly mortgage payment rose by $510 due to the increase in mortgage rates. However, higher home prices pushed up the mortgage payment by $150. It seems that a one-percentage-point increase in mortgage rates has the same impact on the mortgage payment as if home prices rise by 13 percentage points.”

The number of Massachusetts single-family sales that closed in in July was down 17.4 percent year-over-year according to The Warren Group, publisher of Banker & Tradesman, while condominium sales were off 24.5 percent on the same basis.

The shift in rates comes after a week in which the interest rate on 10-year Treasury bonds climbed above 3 percent as investors digested fresh batches of economic data and looked ahead to tomorrow’s speech by Fed Chair Jerome Powell at the central bank’s Jackson Hole conference.

The Federal Reserve is being forced to decide whether to continue raising interest rates aggressively next month, or to moderate the pace of increases as jobs data remains strong and inflation appears weaker than in previous months, but remains elevated.

Freddie Mac’s weekly mortgage rate survey found:

  • The 30-year fixed-rate mortgage averaged 5.55 percent with an average 0.8 point, up from last week when it averaged 5.13 percent. A year ago at this time, the 30-year FRM averaged 2.87 percent.
  • The 15-year fixed-rate mortgage averaged 4.85 percent with an average 0.8 point, up from last week when it averaged 4.55 percent. A year ago at this time, the 15-year FRM averaged 2.17 percent.
  • The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.36 percent with an average 0.4 point, down from last week when it averaged 4.39 percent. A year ago at this time, the 5-year ARM averaged 2.42 percent.

Mortgage Rates Bounce Up to Highest Level in Weeks

by James Sanna time to read: 2 min