Mortgage rates continue to hover near recent highs. The average rate for 30-year, fixed-rate mortgage fell slightly this week, but remained above 7% for the fourth week in a row, the latest Freddie Mac mortgage survey shows.
As of September 7, the rate for a 30-year, fixed-rate mortgage averaged 7.12%, down only slightly from the previous week, according to the survey. On August 24, the 30-year rate reached 7.23%—its 2023 peak and its highest point since 2001.
“The economy remains buoyant, which is encouraging for consumers,” said Sam Khater, Freddie Mac’s chief economist, in a news release. However, he also noted that, although inflation has slowed, “firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers.”
What Are the Current Mortgage Rates?
- The average rate for a 30-year, fixed-rate mortgage averaged 7.12% as of September 7, down from 7.18% the previous week. A year ago, that average was 5.89%.
- The average rate for a 15-year, fixed-rate mortgage was 6.52% as of September 7, down from 6.55% a week earlier. At this time last year, the average was 5.16%.
Figures for Freddie Mac’s weekly mortgage rate survey come from applications that are submitted to mortgage lenders for conventional loans across the U.S. and then sent to the company. Freddie Mac buys mortgages and packages them for sale as mortgage-backed securities.
Mortgage Applications Drop to Lowest Level Since 1996
Mortgage rates have declined a little bit but mortgage application activity dropped off much faster during the week ending September 1, according to a weekly report by the Mortgage Bankers Association (MBA). The number of applications fell that week to its lowest level since December 1996.
Mortgage application volume was down 2.9% from the previous week, says MBA, and 28.9% from the same week a year ago.
Perhaps most notably, the number of mortgage applications for home purchases crashed to the lowest level since 1995. “Prospective buyers remain on the sidelines due to low housing inventory and elevated mortgage rates,” explained Joel Kan, MBA’s vice president and deputy chief economist, in a statement.
The MBA report relies on data that’s separate from Freddie Mac’s survey.
Will Mortgage Rates Go Down Soon?
It remains to be seen whether mortgage rates will go up or down during the last quarter of 2023.
Mortgage rate movements will depend, in part, on whether the Federal Reserve imposes additional hikes in its federal funds rate, which is the benchmark interest rate for lending money. The committee will meet Sept. 19 and 20 to decide its next move.
The Fed has repeatedly boosted interest rates in an effort to bring inflation down to the target rate of 2%. The annualized inflation rate rose to 3.2% in July.
Lawrence Yun, chief economist at the National Association of Realtors, said that the average 30-year mortgage rate might hit 8% in the near future, especially if the Fed committee approves a rate hike this month. But mortgage rates should decrease by year’s end and perhaps close in on 6% next spring, Yun added.
“My view is that the Fed has already overdone the rate hike,” Yun said in a statement. “Not only is real estate being hampered, but big unknowns are arising in the community banking industry. Therefore, the best course would be to stop raising interest rates. Give it time for inflation to settle. And once confirming low inflation, then start cutting interest rates.”
The economy keeps chugging along, but the pace of growth is slowing, which should help move the inflation rate toward 2%, according to Danielle Hale, chief economist at Realtor.com.
“Looking ahead, the economy is nearing an inflection point, and mortgage rate volatility may continue until it is clear that the economic landing has actually occurred, and we are not seeing a touch-and-go on growth that could reignite inflation,” Hale said in a statement.
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