The rollercoaster continues for mortgage rates. After falling 40 basis points last week to 5.30%, purchase mortgage rates climbed back up this week to 5.50%, according to the latest PMMS survey from Freddie Mac.
“Mortgage rates are volatile as economic growth slows due to fiscal and monetary drags,” said Sam Khater, Freddie Mac’s chief economist. “With rates the highest in over a decade, home prices at escalated levels, and inflation continuing to impact consumers, affordability remains the main obstacle to homeownership for many Americans.”
The survey results, which compile purchase mortgage rates reported by lenders during the past three days, comes on the heels of troubling inflation news. The federal government on Wednesday reported that the consumer price index rose 9.1% on a year-over-year basis in June, far above Wall Street’s estimate of 8.8%. It was the fastest pace for inflation since November 1981, and has generated concerns that a recession is just around the bend.
Following the CPI results, the 2-year treasury yield and the 10-year counterpart inverted, which Wall Street analysts say is a telltale sign of a coming recession. The 2-year traded more than 9 basis points higher at around 3.138%. The benchmark 10-year rate, dropped nearly 4 basis points to 2.919%. Wall Street observers believe the Federal Reserve will increase rates by 75 or 100 basis points later this month to stamp out inflation.
Mortgage rates of all stripes moved north on Wednesday following the CPI news. On HousingWire’s Mortgage Rates Center, pricing engine Optimal Blue had 30-year conforming rates at 5.782% on Wednesday. Loan officers told HousingWire this week that they were quoting rates in the low 6% range on conventional products, but about 100 basis points lower on jumbos.
The surge in rates has cooled the housing market over recent months, with buyers fretting over reduced purchasing power and record-high home prices. Homebuilders have also reported higher cancelation figures and lower demand.
The refinancing market in particular, has tanked. Fewer than 20% of mortgage locks in June were refis, and hardly any were rate-term products, according to data from Black Knight.
According to Freddie Mac, the 15-year fixed-rate purchase mortgage this week averaged 4.67% with an average of 0.8 point, up from last week’s 4.45%. The 15-year fixed-rate mortgage averaged 2.22% a year ago.
The 5-year ARM averaged 4.35% this week, up from 4.19% the previous week. The product averaged 2.52% a year ago.