Average long-term mortgage rates in the US saw their biggest jump in a week in 35 years, The Federal Reserve raised its key interest rate this week by three-quarters of a point in an attempt to rein in high inflation.
Mortgage buyer Freddie Mac reported on Thursday that The 30-year interest rate rose from 5.23% last week to 5.78% this week, the highest it reached since November 2008 during the housing crisis.
Wednesday’s rate hike by the Federal Reserve was the largest in a single action since 1994.
The sudden jump of species, along with Sharp rise in housing pricesprompted potential home buyers to exit the market. Mortgage applications down more than 15% from last year, refinancing down more than 70%According to the Mortgage Bankers Association.
These numbers are likely to get worse as the Federal Reserve is almost certain to raise interest rates.
The unusual rate hike by the Federal Reserve came after data released last week showed that Inflation in the United States rose last month to a four-decade high of 8.6%.. The Fed’s benchmark short-term interest rate, which affects many consumer and business loans, will now be in the 1.5% to 1.75% range, and Fed monetary policy makers expect that range to double by the end of the year.
Higher interest rates seem to be hampering the housing market, an important part of the economy. US occupied home sales slowed for the third straight month in April Because of higher mortgage interest rates, which led to higher borrowing costs for potential buyers as housing prices rise.
On Tuesday, online real estate agent Redfin, pressured by a cold housing market, said on Tuesday it would lay off 8% of its workers.
Owning a home has become increasingly difficult lately, especially for first time home buyers. In addition to staggering inflation, rising mortgage rates, and rising home prices, The supply of homes for sale is still scarce.
The average rate on 15-year fixed-rate mortgages, which is popular with home refinance companies, rose to 4.81% from 4.38% last week. A year ago the rate was 2.24%.
By Matt Ott