Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate climbed to 6.92% from 6.66% last week. Last year at this time, the rate was 3.05%.
The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, rose to 6.09% from 5.9% last week, the first time it’s breached 6% since the housing market crash of 2008. One year ago, the 15-year rate was 2.3%.
Late last month, the Federal Reserve bumped its benchmark borrowing rate by another three-quarters of a point in an effort to constrain the economy and tame inflation, its fifth increase this year and third consecutive 0.75 percentage point increase.Another report from the government Thursday showed thatat 8.2%. Combined with the 8.5% inflation at the wholesale level reported on Wednesday, most economists expect another big increase when the Fed meets early in November.
Freddie Mac says that for a typical mortgage, borrowers who locked in at the higher end of the rate range during the past year would pay several hundred dollars more than borrowers who signed contracts at the lower end of the range. By raising borrowing rates, the Fed makes it costlier to take out a mortgage and an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.
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