The average rate on 30-year mortgages rose from 6.66% the previous week to 6.92% this week, Freddie Mac data showed on Thursday.
It marks the highest reading for mortgage rates since 2002 and further indicates the rate depression that followed the Great Recession has come to an end.
The Federal Reserve hiked interest rates for the third time by three-quarters of a percentage point last month (the fifth overall increase this year).
Also read: Mortgage Demand Falls To Lowest Level Since 1997 As Rates Climb To 16-Year Highs
'A Tale Of Two Economies': “Rates resumed their record-setting climb this week, with the 30-year fixed-rate mortgage reaching its highest level since April of 2002,” said Sam Khater, Freddie Mac’s chief economist.
“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. The next several months will undoubtedly be important for the economy and the housing market.”
The 10-year Treasury yield, which has fluctuated recently, is the most pertinent indicator, as the Fed doesn't directly regulate fixed mortgage rates.
Crunching The Numbers: The benchmark 30-year fixed-rate mortgage was 3.21% a year ago. The rate was 6.12% four weeks ago. This week's average 30-year fixed rate is 116.25% higher than the 52-week low of 3.2%.
Over the last 52 weeks, the 30-year fixed has averaged 4.7%.
As mortgage rates near 7%, competition among homebuyers could ease further, though the jump in rates is also squeezing affordability.
The national median family income for 2022 is $90,000, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in August was $389,500, according to the National Association of Realtors.
Based on a 20% down payment and a mortgage rate of 6.92%, the monthly payment of $2,053 amounts to 27.3% of the typical family’s monthly income.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.