According to the results of Freddie Mac’s weekly Primary Mortgage Market Survey, the rate for a fixed 30 year home loan increased to 6.92% for an average home.
Inflation data released today showed another bigger-than-expected rise in CPI which in turn spurred a increase in mortgage rates and 10-year treasury yield.
The Federal Reserve has been combatting inflation using their main tool of raising interest rates. Mortgage rates have doubled since the Federal Reserve began their aggressive plan. According to Freddie Mac’s chief economist, Sam Khater, “we continue to see a tale of two economies in the data. Strong job and wage growth are keeping consumers’ balance sheets positive, while lingering inflation, recession fears and housing affordability are driving housing demand down precipitously.”
As mortgage rates continue to rise, many home buyers have deciding against purchasing a home, which has decreased the demand for new home loans. When comparing the volume of applications of home loans from this time last year, the volume is 39% lower, indicating a significant decrease in buyer demand.
The rise in mortgage rates has put buying a new home out of reach for many buyers. With the continued rise in CPI, the Federal Reserve shows no signs of slowing down its rate hike program, stoking fears of a recession under the Biden Administration.