Mortgage rates climb to 5.66%, weighing on the housing market

WASHINGTON (AP) — Average long-term U.S. mortgage rates hit a two-month high this week, bringing no relief to a falling housing market.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate rose to 5.66% from 5.55% last week. A year ago, the rate was 2.87%.

The average rate on 15-year fixed-rate mortgages, popular among those looking to refinance their homes, jumped to 4.98% from 4.85% last week. Last year, at this time, the rate was 2.18%.

A once-hot housing sector has cooled considerably, with many potential buyers squeezed out of the market as higher interest rates have added hundreds of dollars to monthly mortgage payments. As a result, sales of existing homes in the United States have fallen for six consecutive months, according to the National Association of Realtors.

“The increase in mortgage rates comes at a particularly vulnerable time for the housing market as sellers recalibrate prices due to weaker buying demand, which will likely lead to a continued deceleration in price growth” said Sam Khater, chief economist at Freddie Mac.

Mortgage rates do not necessarily reflect Fed rate hikes, but tend to track the yield of the 10-year Treasury. This is influenced by a variety of factors, including investor expectations for future inflation and global demand for US Treasuries.

Recently, faster inflation and strong economic growth in the United States caused the 10-year Treasury rate to skyrocket to 3.24%.

The Fed has raised its benchmark short-term interest rate four times this year, and Chairman Jerome Powell said last week that the central bank will likely have to keep interest rates high enough to slow the economy.” for a while” in order to tame the worst inflation in 40 years.

The government said the US economy contracted at an annual rate of 0.6% from April to June, a second consecutive quarter of economic contraction, which meets with an informal sign of recession. Most economists, however, said they doubted the economy was in recession or on the verge of a recession, given that the US labor market remains robust.

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