Average long-term US mortgage rates rebound to 5.51% – Chicago Tribune

WASHINGTON — Average long-term U.S. mortgage rates rose this week, just as the latest government data shows inflation hasn’t slowed, meaning the Federal Reserve is all but certain to raise its rate. benchmark borrowing rate later this month.

Mortgage buyer Freddie Mac reported Thursday that the 30-year rate rose to 5.51% from 5.30% last week. A year ago, the 30-year average rate was 2.88%.

The average rate on 15-year fixed-rate mortgages, popular among those refinancing their homes, rose to 4.67% from 4.45% last week. A year ago, the rate was 2.22%.

The Federal Reserve raised its benchmark rate by half a point in May and another three-quarters of a point last month, the biggest hike since 1994. Fed policymakers have signaled that interest rates much higher might be needed to reign – a decade of high inflation. Most economists expect the Federal Reserve to raise its borrowing rate by half to three-quarters of a point when it meets later this month.

Fed officials acknowledge that their rate hikes could weaken the economy, but have suggested such moves are needed to slow price increases toward the Fed’s 2% annual target.

The Labor Department announced on Wednesday that its consumer price index had climbed 9.1% over the past year, the largest annual increase since 1981. On Thursday, Labor released data showing that its index Producer price inflation – which measures inflation before it reaches consumers – rose 11.3% in June from a year earlier.

The Fed’s short-term benchmark rate, which affects many consumer and business loans, will now be pegged to a range of 1.5% to 1.75% – and Fed policymakers predict a doubling of this range by the end of the year.

Higher borrowing rates discouraged house hunters and cooled what was a hot housing market, one of the most important sectors of the economy. Sales of previously occupied US homes slowed for the fourth consecutive month in May.

Home prices continued to climb in May, even as sales slowed. The national median home price jumped 14.8% in May from a year earlier to $407,600 — an all-time high according to NAR data dating back to 1999.

Mortgage applications are down 14% from a year ago and refinances are down 80%, the Mortgage Bankers Association reported this week. Those numbers could fall further with more Fed rate hikes, a virtual certainty.

Layoffs in the housing and credit sectors have already begun. On Tuesday, online mortgage company LoanDepot said it was cutting 2,000 jobs.

Last month, online property broker Redfin said it was laying off 8% of its employees and Compass said it was laying off 450 employees.

The nation’s largest bank by assets, JPMorgan Chase, is laying off hundreds of its mortgage unit and reassigning hundreds more to jobs elsewhere in the business.

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