The 30-year mortgage rate rose to 6.02% from 5.89% last week, reports mortgage buyer Freddie Mac.
Average long-term U.S. mortgage rates topped 6% this week for the first time since the 2008 housing crash, threatening to push even more buyers out of a rapidly cooling housing market.
Mortgage buyer Freddie Mac reported on Thursday that the 30-year rate rose to 6.02% from 5.89% last week.
The average long-term rate has more than doubled in the past year and is the highest since November 2008, just after the housing market crash triggered the Great Recession. A year ago, the rate was 2.86%.
Rising interest rates — in part due to aggressive pressure from the Federal Reserve to rein in inflation — have cooled a housing market that has been boiling for years.
Many would-be home buyers are being pushed out of the market as higher rates have added hundreds of dollars to monthly mortgage payments. Sales of existing homes in the United States have fallen for six consecutive months, according to the National Association of Realtors.
The average rate for 15-year fixed-rate mortgages, popular among those looking to refinance their homes, rose to 5.21% from 5.16% last week. Last year, at the same time, the rate was 2.19%.
The US Federal Reserve has raised its benchmark short-term interest rate four times this year, and Chairman Jerome Powell has said the central bank will likely have to keep interest rates high enough to slow the economy “for a while” in order to tame the worst inflation in 40 years.
A worse-than-expected key inflation reading on Tuesday cemented expectations that the Fed will be forced to offer a third consecutive 75 basis point interest rate hike at its policy meeting next week, with investors predicting now that the central bank will have to raise rates faster and further than previously thought.
The effect of rising interest rates was felt throughout the housing sector.
Sales of new homes fell to a six-and-a-half-year low in July, while home resales and single-family housing starts are at two-year lows.
But house prices remain high amid a critical shortage of affordable housing, making a housing market collapse unlikely.
The government said the U.S. economy contracted at an annual rate of 0.6% from April to June, a second consecutive quarter of economic contraction, which is meeting with an informal sign of recession.
Most economists, however, said they doubted the economy was in recession or on the verge of a recession, given that the US labor market remains robust.
Applications for jobless aid fell again last week and remain at their lowest level since May, despite the Fed’s measures to control inflation, which also tends to cool the labor market.