The interest rate for the 30-year loan reached an average of 7.09% this week, prompting more home buyers to revisit their budgets. Freddie Mac reports that mortgage rates are now at the highest averages since April 2002.
The higher rates are translating into rising monthly mortgage payments—an average of $2,234 for a single-family home and $1,942 for a condo, says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. “The increased mortgage rate is exacerbating housing affordability as home prices are climbing in this limited inventory environment,” Lautz says. “Something has to give for rates to come down, and that something is the next decision by the Fed.” However, here are six ways buyers can save on their mortgage.
The Federal Reserve at its next meeting in September will decide whether to continue raising its short-term benchmark interest rate, which has been blamed for pushing up mortgage rates and other borrowing costs. The Fed has raised its rate 10 times, pausing briefly in June. Economists have called on the Fed to stop its rate increases due to improving inflation and economic data.
“The economy continues to do better than expected, and the 10-year Treasury yield has moved up, causing mortgage rates to climb,” says Sam Khater, Freddie Mac’s chief economist. “The last time the 30-year fixed-rate mortgage exceeded 7% was last November. Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 17:
- 30-year fixed-rate mortgages: averaged 7.09%, rising from last week’s 6.96% average. Last year at this time, 30-year rates averaged 5.13%.
- 15-year fixed-rate mortgages: averaged 6.46%, increasing from last week’s 6.34% average. A year ago, 15-year rates averaged 4.55%.