Mortgage rates have increased for the fourth consecutive week, indicating a strengthening U.S. economy with slow inflation. According to data released by Freddie Mac on August 17, the 30-year fixed-rate mortgage now stands at 7.09%, the highest since April 2002 when it was 7.13%. The 15-year mortgage rate has also risen to 6.46% from last week's 6.34%. These figures reflect the upward trend in rates, which were significantly lower a year ago.
What Freddie Mac Says
Chief economist Sam Khater from Freddie Mac explains that the economy is performing better than expected, with mortgage rates climbing due to the rise in the 10-year Treasury yield. Khater emphasizes that affordability challenges have impacted demand, but low inventory remains the primary cause of stalled home sales.
Leading economist Lisa Sturtevant warns that surpassing the 7% mortgage rate threshold could trigger a significant contraction in the housing market this autumn. Despite the increase in mortgage rates, she notes that the housing market has shown surprising resilience since last November. However, she cautions that higher rates will discourage both buyers and sellers, resulting in a cooling housing market without substantial price drops in most local markets.