Mortgage rates reached the highest level in more than 13 years for the second straight week.
The average rate on a 30-year fixed-rate mortgage rose to 5.81%, mortgage-finance giant Freddie Mac said Thursday, the highest level since November 2008.
Last week, Freddie Mac reported an average mortgage rate of 5.78%, up from 5.23% the week before. That was the largest weekly increase in rates since 1987. Some lenders are already quoting rates of 6% or more.
The latest increase in home buyer borrowing costs comes after the Federal Reserve last week raised interest rates by the largest margin since 1994 and said it planned future increases. Higher mortgage rates are weighing on home sales, which slid for a fourth straight month in May. But the central bank’s efforts to curb inflation have yet to cool median home prices. The median price for a home in the U.S. shot above $400,000 for the first time last month, according to the National Association of Realtors.
The combination of rising rates and high home prices are likely responsible for declining home sales, Freddie Mac chief economist Sam Khater said in a statement.
“Many potential home buyers are still interested in purchasing a home, keeping the market competitive but leveling off the last two years of red-hot activity,” he said.
The last time mortgage rates hit 6%, in the fall of 2008, they were on the way down. The Fed was slashing interest rates to try to keep the economy afloat during the financial crisis.
Via Orla McCaffrey, The Wall Street Journal.
