Mortgage Rates Soar to Highest Level Since 2008 at 5.81%

Mortgage-finance giant Freddie Mac said in a statement Thursday the average for a 30-year fixed-rate mortgage rose to 5.81%, up from 5.78% last week. This is the highest level since November 2008 and well above the 3.11% recorded near the start of the year. At the last Federal Reserve meeting the bank rose rates by 75 basis points, the largest amount since 1994. The effect of interest rates is being felt hard by homebuyers. The average rate on a 30-year, fixed-rate mortgage rose to 5.78%, mortgage-finance giant Freddie Mac said Thursday.

In just two week it has risen over half a percent. Two weeks Freddie Mac reported an average mortgage rate of 5.23%. The surge was the largest weekly increase since 1987.

The benchmark 10-year yield has surged in recent months hitting its highest level in over ten years, Freddie Mac’s weekly average is based on its survey of lenders. The 5.78% figure was recorded before the central bank’s Wednesday announcement. We are already seeing quotes over 6% by lenders

Treasury Market Close June 23 2022

  • 2-yr: -4 bps to 3.01%
  • 3-yr: -10 bps to 3.10%
  • 5-yr: -9 bps to 3.13%
  • 10-yr: -9 bps to 3.07%
  • 30-yr: -6 bps to 3.18%

“The combination of rising rates and high home prices is the likely driver of recent declines in existing home sales,” said Sam Khater, Freddie Mac’s chief economist. “However, in reality, many potential homebuyers are still interested in purchasing a home, keeping the market competitive but leveling off the last two years of red-hot activity.”

May US existing home sales from the National Association of Realtors fell 3.4% to 5.41 million below market forecasts of 5.40 million. This was the fourth straight month of declines. Higher interest rates are creating affordability pressures for prospective buyers. This is becoming an even bigger factor with higher mortgage rates.

The slowdown has led to major layoffs across the industry. The biggest US bank, JPMorgan Chase & Co., is laying off hundreds of home-lending employees and reassigning hundreds more. Brokerages Compass Inc. and Redfin Corp. are also cutting hundreds of workers.

“Market prices will continue adjusting to a smaller pool of qualified buyers and higher financing costs,” George Ratiu,’s manager of economic research, said in a note. “The move from an overheated real estate market toward a more sustainable one will take some time.”

For buyers of a median-priced home, the double-whammy of soaring prices and higher rates has pushed monthly mortgage payments to about 64% more than last year, according to Raitu.

The Mortgage Bankers Association showed mortgage applications in the US w.e. 17 June rose another 4.2% after rising 6.6% the prior week. Buyers appear to be trying to get in ahead of more Fed rate rises. The average long-term mortgage rate climbs by another 33 bps to its highest since November 2008. Refinancing activity dropped as those locked in are content to hold off. The Federal Reserve raised rates 75bps a week ago. The 30-year mortgage rate has been rising with yields with higher house prices in general.

Source: Freddie Mac, Bloomberg, TC

From The TradersCommunity News Desk