According to data released by Freddie Mac on Thursday, the 30-year fixed mortgage rate in the United States increased to 6.96% at the end of the week of August 10, this represents the third consecutive week of increases compared to 5.22% from a year ago.
Although mortgage rates still remain below the 7% threshold for Sam Khater, chief economist at Freddie Mac, “there is no question that continued high rates will prolong affordability challenges longer than expected,” he said .
Nevertheless, the specialist points out that “the upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which has historically kept purchase demand strong,” he said. .
Fed policies have affected the housing market
This latest figure represents the highest level since November of last year and above 6.5% in May of this year. This increase is due in large part to the strategy of the Federal Reserve which, since last year, has promoted the constant rise in interest rates to control inflation and bring it to its target of 2%.
Currently , interest rates have increased 11 times, reaching 5.50% after their pause in June and according to Jerome Powell, president of the Federal Reserve, for the end of this year two more increases can be expected,
This is for two main reasons, homeowners don't want to leave their previous lower rates, while it is more expensive for buyers to do so at the current rate at an additional amount on top of this is low inventory in the housing market that ends up slowing down sales.
Bob Broeksmit, President and CEO of MBA, notes that “because of these higher rates, there has been a significant decline in mortgage application activity. Potential buyers and sellers alike are feeling the pressure from higher rates as well as low home inventory, which has caused a sharp slowdown in activity this summer,” he said.