WASHINGTON (AP) — Average long-term U.S. mortgage rates rose this week as inflation worries remained at the fore and the slowdown in economic growth weighs on the housing market.
Mortgage buyer Freddie Mac reported Thursday that the 30-year rate increased to 5.55% from 5.13% last week. Last year at this time, the rate stood at 2.87%.
The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, jumped to 4.85% from 4.55% last week.
Rapidly rising interest rates — which add hundreds of dollars to monthly mortgage payments — have pushed many potential homebuyers to the sideline this year, cooling the once red-hot housing market.
The National Association of Realtors said last week that existing home sales fell for the sixth consecutive month in July, slowed by higher mortgage rates and home prices that are still steadily rising, though at a slower pace.
The U.S. economy shrank at a 0.6% annual rate from April through June, the government reported Thursday in an upgrade from its initial estimate. It marked a second straight quarter of economic contraction, which meets one informal sign of a recession. Most economists, though, have said they doubt that the economy is in or on the verge of a recession, given that the U.S. job market remains robust.
In a drive to tame the worst inflation bout the U.S. has endured in four decades, the Federal Reserve has embarked on its fastest series of interest rate hikes — four times this year — since the early 1980s.
Inflation worries are top of mind as Fed officials and leading economists meet this week at their annual symposium in Jackson Hole, Wyoming, to discuss global economic challenges. A speech on Friday by Fed Chairman Jerome Powell could signal how high or how fast the central bank may raise interest rates in coming months.
Mortgage rates don't necessarily mirror the Fed's rate increases. They tend to track the yield on the 10-year Treasury note, which is influenced by a variety of factors, including investors' expectations for future inflation and global demand for U.S. Treasurys.
Recently, faster inflation and strong U.S. economic growth have sent the 10-year Treasury rate up sharply.