It hasn’t been this expensive to take out a mortgage in 14 years. A market survey released by Freddie Mac last week showed that the average 30-year fixed mortgage rate has hit a 14-year high of 5.81%.
Since the beginning of this year, fixed mortgage rates have increased by more than two full percentage points. Only a year ago, the 30-year fixed mortgage rate was 3.02%. 15-year fixed mortgage rates are rising just as quickly, coming in at an average of 4.92% compared with 2.34% a year ago.
This increase in mortgage rates is a natural byproduct of the Federal Reserve’s aggressive rate hikes intended to curb inflation. As long as the Fed keeps increasing rates, mortgage rates will also continue to grow.
Why it matters
An increase in mortgage rates makes financing a home much more expensive, and the market's finally starting to cool off. According to Freddie Mac's chief economist Sam Khater, “the combination of rising rates and high home prices is the likely driver of recent declines in existing home sales."
