Average Mortgage Rates Steady But Still Above 7%, Says Freddie Mac; Fed Maintains Status Quo

30-Year Mortgage Rates Barely Twitch, Says Freddie Mac, As Fed Stands Pat

John EganPersonal Finance Expert

John Egan is a veteran personal finance writer whose work has been published by outlets such as Bankrate, Experian, Newsweek Vault and Investopedia.

John Egan

John EganPersonal Finance Expert

John Egan is a veteran personal finance writer whose work has been published by outlets such as Bankrate, Experian, Newsweek Vault and Investopedia.

Personal Finance Expert

Caren WeinerLead Editor, Taxes & Consumer Finance

Since her first tax article appearing more than three decades ago in Money magazine, Caren Weiner has written and edited stories about money management topics ranging from investment fees and health costs to household budgets. Her finance- and investment-related stories and visualizations have been featured by NerdWallet, Bankrate, AARP, Money and GoodRx. She has also worked at lifestyle publications including InStyle, Entertainment Weekly and All You.

Caren Weiner

Caren WeinerLead Editor, Taxes & Consumer Finance

Lead Editor, Taxes & Consumer Finance

Published: Sep 21, 2023, 3:28pm

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30-Year Mortgage Rates Barely Twitch, Says Freddie Mac, As Fed Stands Pat

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The rate for a 30-year, fixed-rate mortgage barely budged this week, according to the latest rate survey from mortgage buyer Freddie Mac. Meanwhile, speculation is swirling about how—and when—the Federal Reserve’s decision to pause interest rate hikes will affect mortgage rates.

As of September 21, the 30-year rate averaged 7.19%, inching up from 7.18% the previous week, the survey shows.

“Given these high rates, housing demand is cooling off and now homebuilders are feeling the effect,” said Sam Khater, Freddie Mac’s chief economist, in a news release. “Builder sentiment declined for the first time in several months and construction levels have dipped to a three-year low, which could have an impact on the already low housing supply.”

Results of this week’s Freddie Mac survey come on the heels of the Fed’s announcement that it will keep interest rates unchanged for now.

Michele Raneri, vice president and head of U.S. research and consulting at the TransUnion credit bureau, said in a statement the Fed’s announcement might spur would-be home buyers “who have been holding off…to consider making the home purchase they have been waiting on.”

What Are the Current Mortgage Rates?

The rate for a 30-year, fixed-rate mortgage averaged 7.19% as of September 21, up from 7.18% the previous week. A year ago at this time, the rate averaged 6.29%.
The average rate for a 15-year, fixed-rate mortgage was 6.54% as of September 21, up from 6.51% a week earlier. At this time a year ago, the rate averaged 5.44%.

Figures for the weekly mortgage rates survey come from conventional mortgage applications submitted to lenders across the U.S. and then sent to Freddie Mac. The company buys mortgages and packages them as mortgage-backed securities.

Federal Reserve Keeps Benchmark Interest Rate In Place

In a much-anticipated move, the Federal Reserve announced on September 20 that it would freeze its benchmark federal funds rate until further notice. That interest rate remains in the range of 5.25% to 5.50%.

The federal funds rate influences mortgage rates offered by banks and other lenders, but the Fed itself doesn’t set mortgage rates.

Since March 2022, the Fed has imposed 11 rate hikes in a bid to tame inflation. The hikes have helped lower the inflation rate, yet inflation still lingers above the Fed’s 2% target. August’s annualized inflation rate was 3.7%, up from 3.2% the previous month.

Fed board members and Fed bank presidents don’t expect inflation to fall to 2% until 2026.

Despite Rate Environment, Mortgage Applications Go Up

Ahead of the Fed’s decision, the Mortgage Bankers Association, or MBA, reported that the number of mortgage applications rose 5.4% as of September 15 over the previous week’s volume. Compared to the same week in 2022, however, volume was down 27.4%.

The jump in applications came as the average 30-year rate rose to 7.31%, according to MBA, up from 7.27% the previous week. MBA uses rate data that’s separate from Freddie Mac’s.

Joel Kan, MBA’s vice president and chief deputy economist, noted that applications for home purchases rose despite the continuation of “higher rates and limited for-sale inventory, which have made purchase conditions more challenging.”