WASHINGTON–The average rate on a 30-year fixed-rate mortgage rose to 5.78%, the highest level since November 2008 and significantly above the 3.11% average at year-end 2011, according to Freddie Mac. recorded near the end of last year. Last week, Freddie Mac reported an average mortgage rate of 5.23%.
That 5.78% average rate was recorded prior to last week’s increase in rates by the Federal Reserve.
The price increase marked the biggest surge the mortgage rate has seen since 1987, and put new pressure on housing affordability as prices remain high.
The yield on the 10-year Treasury, to which mortgage rates are tied closely to the 10-year U.S. Treasury yield, often moves in tandem with expectations for the Fed’s benchmark rate, has also hit its highest level since 2011, having more than doubled this year.
‘Profoundly Disruptive Effect’
The Fed “is having a profoundly disruptive effect on real-estate markets,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, told the Wall Street Journal. “Demand for housing has dropped pretty sharply, and we’re beginning to see commercial real estate slow.”
According to data provided by Realtor.com to the Journal, home buyers in May paid about $740 more a month to finance a median-priced U.S. home than they did in May 2021, when rates were closer to 3% and prices were lower.
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