US mortgage rates jumped this week, climbing closer to 7%. The move follows last week’s rate hike from the Federal Reserve, and the downgrade this week by Fitch Ratings agency of US sovereign debt, and of Freddie Mac and Fannie Mae.
The 30-year fixed-rate mortgage averaged 6.90% in the week ending on August 3, up from 6.81% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 4.99%, the lowest rates have been in the last 12 months.
“The combination of upbeat economic data and the U.S. government credit rating downgrade caused mortgage rates to rise this week,” said Sam Khater, Freddie Mac’s chief economist. “Despite higher rates and lower purchase demand, home prices have increased due to very low unsold inventory.”
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.
Next up: Employment and inflation data
The fixed rate for a 30-year mortgage continued to close in on 7% this week as 10-year Treasury yields climbed past the 4% threshold, said Hannah Jones, economic data analyst at Realtor.com.
“On Wednesday, the US Treasury announced it would sell off more than $100 billion of long-term securities, driving 10-year Treasury yields to the highest level since November,” said Jones. “This development, along with upcoming employment and inflation data, will determine how much mortgage rates may rise in the short term.”
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Source: edition.cnn.com
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