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Mortgage rates see-saw in 7% range as application volume hits lowest since 1996

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The average rate for a 30-year, fixed-rate mortgage (FRM) has risen to match its level two weeks ago, continuing to fluctuate in the 7% range, according to the latest Freddie Mac mortgage survey. As of Wednesday, the rate for a 30-year FRM averaged 7.18%, up from 7.12% the previous week. On August 31, the average rate was also 7.18%.

“Mortgage rates inched back up this week and remain anchored north of 7%,” said Sam Khater, chief economist at Freddie Mac on Thursday. He attributed the elevated mortgage rates to the reacceleration of inflation and strength in the economy.

The average rate for a 15-year FRM was 6.51% as of Wednesday, slightly down from 6.52% a week earlier. A year ago at this time, the rate averaged 5.21%. These figures are based on conventional mortgage applications submitted to lenders across the U.S., which are then forwarded to Freddie Mac for packaging into mortgage-backed securities.

In tandem with these daunting mortgage rates, the volume of mortgage applications continues to decline. The Mortgage Bankers Association’s (MBA) latest weekly mortgage application survey shows that as of Tuesday, the number of applications had dropped for the seventh time in eight weeks, reaching its lowest level since 1996. The number of applications dipped by 0.8% from the previous week and declined by 28.5% from the same time in 2022.

Joel Kan, MBA’s vice president and deputy chief economist, stated that due to high rates, there is minimal refinance activity and a reduced incentive for homeowners to sell and buy a new home at a higher rate.

The Federal Reserve’s rate-setting committee is set to meet on September 19-20, when it will decide whether to raise, lower or maintain the benchmark rate known as the federal funds rate, which influences mortgage rates offered by banks and other lenders. The inflation rate, which jumped to 3.7% in August from 3.2% the previous month, remains a key factor in these upcoming monetary policy decisions.

Freddie Mac’s mission is to promote liquidity, stability, affordability and equity in the housing market throughout all economic cycles. Since 1970, it has helped tens of millions of families buy, rent or keep their homes.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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