The 30-year fixed-rate mortgage averaged 5.23% for the week ending June 9, according to data released by Freddie Mac
on Thursday. That’s up 14 basis points from the previous week — one basis point is equal to one hundredth of a percentage point, or 1% of 1%.
The average rate on the 15-year fixed-rate mortgage rose 6 basis points over the past week to 4.38%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 4.12%, up 8 basis points from the prior week.
After little movement the last few weeks, mortgage rates rose again on the back of increased economic activity and incoming inflation data, Sam Khater, chief economist at Freddie Mac, said in a press release.
“The housing market is incredibly rate-sensitive, so as mortgage rates increase suddenly, demand again is pulling back,” Khater added.
One sign of demand, mortgage applications, meanwhile, have fallen to the lowest level in 22 years.
Housing is the first sector where demand is being impacted by the Federal Reserve’s efforts to cool inflation, said one economist.
“This goes back to what the Fed wants to do, which is to dampen demand using this blunt instrument of monetary policy,” Jennifer Lee, a senior economist at BMO Capital Markets, told MarketWatch.
“They’re hoping to dampen demand and ease some of the pressure on inflation. And the housing market is one big part of that because it’s benefitted so much from so many years of low interest rates,” Lee added. “So this is basically showing that the Fed is getting what they want — it’s having the intended effect, which is cooling demand.”
Lee said that prices might fall over the coming months.
The yield on the 10-year Treasury note
rose above 3.05 in midday trading.