The 30-year fixed-rate mortgage (FRM) averaged 5.89% for the week of Sept. 8, the highest level since 2008, according to the Freddie Mac Primary Market Survey. The 30-year FRM is more than 20 basis points higher than a week ago, when it averaged 5.66%. A year ago, the 30-year FRM averaged 2.88%.
“Mortgage rates rose again as markets continue to manage the prospect of more aggressive monetary policy due to elevated inflation,” says Sam Khater, Freddie Mac’s chief economist. “Not only are mortgage rates rising, but the dispersion of rates has increased, suggesting that borrowers can meaningfully benefit from shopping around for a better rate. Our research indicates that borrowers could save an average of $1,500 over the life of a loan by getting one additional rate quote and an average of about $3,000 if they get five quotes.”
According to Freddie Mac, the 15-year FRM averaged 5.16% for the week of Sept. 8, up from 4.98% a week ago. The 15-year FRM is up nearly 300 basis points on a year-over-year basis. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 4.64% for the week of Sept. 8, up from 2.42% during the same period in 2021.
While mortgages have steadily been increasing in recent weeks, the demand for mortgages is cooling, according to the Mortgage Bankers Association (MBA). According to the MBA’s Weekly Mortgage Applications Survey for the week ending Sept. 2, mortgage applications decreased 0.8% compared with the prior week. The survey’s Refinance Index was 83% lower than the same week in 2021 and the seasonally adjusted Purchase Index was down 23% on a year-over-year basis.
“Mortgage rates moved higher over the course of last week as markets continued to reassess the prospects for the economy and the path of monetary policy, with expectations for short-term rates to move and stay higher for longer,” says MBA senior vice president and chief economist Mike Fratantoni.
Fratantoni says recent economic data will “likely prevent any significant decline in mortgage rates in the near term,” though the strong job market and increase in housing inventories should lead to an eventual increase in purchase activity.
According to the MBA, the ARM share of activity remained unchanged for the week of Sept. 2 compared with the previous week at 8.5% of total applications. The FHA share of total applications increased 30 basis points to 13.3% on a week-over-week basis, while the VA share of total applications decreased from the previous week.
