Mortgage rates move closer to 7%
The 30-year fixed-rate mortgage rose to 6.81% this week as the Fed raised its benchmark rate to the highest level since 2001.
- Mortgage rates returned to the same level seen at the beginning of the month after spiking in mid-July.
- Even with elevated interest rates, other economic data indicates buyers are willing to spend if they can find a house.
- Inventory remains very low, however, as sellers don’t want to give up their ultra-low mortgage rates.
Mortgage interest rates were back on the rise this week and could remain elevated as the federal government continues to try and tackle inflation.
The 30-year fixed-rate averaged 6.81% this week, according to the latest Freddie Mac survey. That's up slightly from last week's 6.78% but still below this year's peak of nearly 7% posted earlier this month.
The slight rise this week coincided with the anticipated Federal Reserve rate hike announced on July 26. The rate hike — the 11th since March 2022 — puts the benchmark rate at its highest level since 2001.
Still plenty of demand from buyers
Despite elevated mortgage rates, buyers are still making offers, said Hannah Jones, Realtor.com's economic data analyst. Sellers, however, seem less willing to put their house on the market and give up their low rates. Many currently have rates under 4%.
"As a result, some markets are seeing high levels of competition as eager buyers compete for the relatively few homes on the market," Jones said, noting that home prices have not fallen significantly nationally despite ongoing affordability challenges.
For homebuyers who are willing to spend, agents should advise clients to shop around for the best interest rate because there's a wide variation across lenders right now, said Lisa Sturtevant, chief economist for Bright MLS.
"For some buyers, the 15-year ARM or adjustable rate mortgage offers favorable options as the 30-year rate remains high," Sturtevant said.
With mortgage interest rates climbing again, mortgage applications fell 1.8% this week according to the Mortgage Bankers Association.