30-year mortgage repayment rate below 7%

A day after the Federal Reserve raised its benchmark borrowing rate to its highest level in 15 years, average long-term US mortgage rates rose as central banks tried to keep inflation at a 40-year high. It fell below 7% this week.

Mortgage buyer Freddie Mac on Thursday reported that the average interest rate on its main 30-year contract fell to 6.95% from last week’s 7.08%. At this point last year, the percentage was 3.09%, according to the company.

Interest rates on 15-year mortgages, which are often used to refinance home loans, fell to 6.29% this week from 6.36% last week. A year ago he was 2.35%, Freddie Mac said.

On Wednesday, the Fed raised short-term lending rates by another 0.75 percentage points for the fourth straight time this year. The key rate is currently in the 3.75% to 4% range and could go higher in the future.

Fed Chairman Jerome Powell said Wednesday that recent data show policymakers may need to raise interest rates higher than their forecast of 4.6% in September if inflation continues.

Average long-term mortgage rates in the US have climbed above 7% in the past two weeks for the first time in over 20 years. This, combined with soaring home prices, has crushed the purchasing power of homebuyers, adding hundreds of dollars to their monthly mortgage payments. .

Sales of existing homes have fallen for the eighth straight month. Mortgage costs are too high a hurdle for many Americans who are already paying more for food, gas and other essentials. On the other hand, some homeowners are holding off putting their homes on the market because they don’t want to jump to higher interest rates on their next mortgage.

Mortgage rates don’t necessarily reflect Fed rate hikes, but they do tend to track 10-year Treasury yields. Yields are influenced by a number of factors, including investor expectations of future inflation and global demand for U.S. Treasuries.

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