The mortgage rate for a 30-year home loan averaged 6.81% this week, reaching its highest point so far this year, Freddie Mac reports. “This upward trend is being driven by a resilient economy, persistent inflation and a more hawkish tone from the Federal Reserve,” says Sam Khater, Freddie Mac’s chief economist. “These high rates, combined with low inventory, continue to price many potential home buyers out of the market.”
Mortgage applications for home purchases are fluctuating—dipping 5% last week, according to the Mortgage Bankers Association—with the movement in borrowing costs. “Rates are still over a percentage point higher than a year ago, and housing affordability is still a challenge in many parts of the country,” Joel Kan, deputy chief economist at the Mortgage Bankers Association, said in a statement. “However, the average loan size for a purchase application declined to $423,500—its lowest level since January.” This has largely been driven by a decline in home buying in high-priced markets and an increase in lower price tiers, Kan added.
Despite the week-to-week fluctuations, some home buyers may be adjusting to a new normal for mortgage rates in the 6% to 7% range, says George Ratiu, chief economist at Keeping Current Matters. Mortgage rates began climbing late last year and have stayed within that range ever since. The pace of home sales has mostly kept steady over the past few months, Ratiu says. Builders are pushing construction activity higher, too, he adds.
Freddie Mac reports the following national averages with mortgage rates for the week ending July 6:
- 30-year fixed-rate mortgages: averaged 6.81%, increasing from last week’s 6.71% average. A year ago, 30-year rates averaged 5.3%.
- 15-year fixed-rate mortgages: averaged 6.24%, rising from last week’s 6.06% average. A year ago, 15-year rates averaged 4.45%.